Prior to his Xavier speech, LaVaughn Henry, vice president and senior regional officer for the Cincinnati Federal Reserve Bank, offered a reporter a rare insider’s tour of the Fed bank vault.
This isn’t the sanitized version provided to school kids, who only get to peer through one bulletproof glass window far removed from the actual action. This tour goes inside the vaults—many, many rooms, with many, many nice gentlemen who could be named Smith and Wesson.
There’s enough money here to make Ebenezer Scrooge blush. Stacks of $20 bills tower toward the ceilings. Trolley carts are loaded down with heavy bags of coins. The only thing missing is gold bullion, and who knows, that could well be here, too. The 30 minutes spent inside the vaults only covers about half the rooms. Many are sealed.
An airtight Plexiglas tank sits off to the side in one part of the vault area, half filled with “reject” money. “That’s the stuff that came in contaminated,” said one worker. “It can be the sensors detected blood on the bills or something else.”
For the contaminated bills, it’s off to a one-way trip to a local crematorium. The rest of the aging, torn or counterfeit money is “disposable income,” shredded on-site.
The new money to replace all this “unfit” currency is hauled in directly from the Bureau of Engraving. Old money out, new money in.
In the old days, if any given bank ran out of hard cash on hand, it immediately closed its doors to the public — not exactly sending a sound message of stability to customers, even though the bank likely could obtain more hard dollars within a few days. The Federal Reserve, founded in 1913 by an act of Congress, is there to make sure the hard cash is available within hours.
All this shuffling of bills back and forth has become a necessary gear in the clockwork of the American financial system. The Fed was the nation’s first central bank, though its mission has since expanded into fostering a healthy economy through interest policy.
As the official In Plain English: Making Sense of the Federal Reserve brochure, states: “Reserve banks are the decentralized components of the Fed’s structure, meaning that they operate independently.
“Reserve banks are often called the ‘banker’s banks’ because they store commercial banks’ excess currency and coins. … Each Reserve bank also has its own board of directors.”
Back in the executive suite, just down the hall from the Fed cafeteria, an associate of Henry’s shows off a virtual money museum on the walls—currency dating back a century, to the days when they engraved the words “Dayton” or “Cincinnati” on fresh $20 bills, so everyone knew where they were originally issued. A circular stone “yap” imported from a Pacific island, a full foot in diameter, is displayed as the earliest known form of currency.
From his executive office, the Fed-head can overlook the Cinergy building directly across the street, with its fantastic panorama of rusty air vents and four steaming furnace units on the roof. “Yes, indeedy, it’s quite a view,” joked Henry.
It’s safe to say that relatively few people get into his office, buried as it is far inside the stronghold that is the Cincinnati Fed. Multiple armed guards in the lobby put visitors through the paces—metal detectors, identification checks—long before a floor pass and security swipe card can even be issued. And don’t even ask for a map of the building. Not that you’ll have much need for directions, since you’re never without an “escort”—or two or three on some floors.