Federal Reserve Governor Christopher Waller on Tuesday laid out a proposal to change how the Federal Reserve system organizes operational work across its 12 regional Reserve Banks. In remarks delivered at the Brookings Institution in Washington, Waller said core business functions such as human resources, finance, procurement and technology should be moved toward national lines of business rather than being run independently by each Reserve Bank.
Waller presented two possible structures for such a reorganization. The first model would standardize operations with centralized system leadership, consolidating key support functions under the responsibility of a single senior leader for the system. The second model would go further, combining standardization with physical consolidation of functions that do not require a local presence.
The governor emphasized that the plan is not intended to centralize the Fed's policy authority in Washington. He argued the decentralized structure of the Federal Reserve is essential for carrying out core responsibilities and said each regional bank president should retain an independent voice at Federal Open Market Committee monetary policy meetings. Waller also stated he sees no reason to reduce the number of Reserve Banks or to change their geographic boundaries.
Waller identified specific activities that, in his view, do not depend on geography and could benefit from integration, scale and standardization. He listed human resources systems, payroll and benefits administration, finance and accounting, procurement and vendor management, payments, technology and fiscal agency work as examples of such activities.
The governor said the Fed has arrived at a point where it should capture efficiency gains and reduce risk by standardizing and likely centralizing many regional Reserve Bank functions. He added that outsourcing some activities should be considered when cost savings justify it. Waller acknowledged that the deeper consolidation envisioned in the second model could lead to lower employment levels at regional Reserve Banks in the future.
Waller did not address the economic outlook or interest-rate policy during his Brookings remarks. He and other Fed officials are in the blackout period ahead of next week's monetary policy meeting, and he offered no commentary on rates or the immediate policy stance.
Context and next steps
The governor framed the proposal as an operational and organizational initiative rather than a change in policy governance. He argued for systemwide leadership over operational functions while preserving the decentralized voice of regional presidents at policy meetings. Specific implementation steps, timelines and cost estimates were not detailed in his remarks.
Summary of Waller's proposals
- Move key support functions to national lines of business and centralize leadership for those functions.
- Consider physical consolidation for activities that do not require local presence, while maintaining decentralized policy decision roles.
- Evaluate outsourcing where it produces demonstrable cost savings.