The business economist at work: marketing a specialty - regional economist at First National Bank of Chicago

Business Economics, April, 1995 by Diane Swonk

INSTITUTIONALIZING THE JOB

By the late 1980s, we had fully integrated the regional analysis into the macroeconomic forecasting functions of the economics department. All strategic planning initiatives included a regional slant, and the bank had begun the process of adopting a Midwest strategy. By the late 1980s, First Chicago was in the market to buy banks and the Midwest was its target. In 1989, the Chairman even started to report conditions in the region as a part of the bank's annual report to shareholders.

In 1987, Jim Annable started the Economic Council. The group consisted of the Chairman, the heads of credit, the heads of key business lines, and the heads of economic analysis. The goal of the group was to come to a bank consensus regarding the long-term trends influencing the economy. By getting the bank to sign off on an economic forecast, we were essentially forcing some level of economic discipline on the strategies of senior managers. (The effects that the Council had on the mindset of senior managers lasts today.)

In the period between 1988 and 1991, much of my work was geared for the Economic Council's consumption. I was doing long-term analysis, with the corporate strategy of the bank in mind. The primary goal was to hedge the bank against economic risk on the regional front.

By 1989, it was clear that a focus on the Midwest alone was not enough. First Chicago was (and still is) a national bank, with a national portfolio. The bank was exposed to economic risk in all regions of the country, and we needed to guard ourselves against that risk.

The expansion of regional analysis to all regions of the country was fairly academic. The framework was already set up for the Midwest. All I had to do was create a similar set of translation models for the remaining regions of the country. I covered eight regions in all, and when I was done, came up with a ranking of regions by economic prospects. Once again, the results were compelling. The Midwest remained a clear winner, but the coasts were in trouble. If the bank was hoping to hedge itself fully against regional economic risk, it would have to guard against a downturn on the coasts as well as position itself for an upturn in the Midwest.

This time around, however, the internal sell was an easy one. My credibility had already been established, and the Economic Council presented me with a mechanism to disseminate my analysis formally to senior managers. The bank's credit card operations were the largest consumer of my work. The question of where to be more aggressive (cautious) on our portfolio were clearly laid out in the regional winners and losers analysis.

Efforts to generate publicity for my work were stepped up. Marketing an expertise on the Midwest economy had become a part of the bank's strategic plan. In 1990, I held my first formal press conference. The regional winners and losers analysis was repackaged and released to the press. The response was tremendous. The study was reported in all major news markets across the country, and in the national financial press.