Say the phrases “Harvard educated” and “Ph.D. in economics” in the same sentence, and the image that immediately drifts into most people’s minds is that of a dry, humorless policy wonk.

The image most definitely does not apply to LaVaughn Henry. “I’m more of a ‘howdy’ kind of guy,” Henry laughs. “I’m still trying to get people here to stop calling me Dr. Henry.”

Henry is now in his fourth month of running the Tristate’s most guarded institution, the Cincinnati Federal Reserve Bank. From his executive office, the Fed-head can overlook the Cinergy building directly across Fourth Street, with its fantastic panorama of rusty air vents and four steaming furnace units on the roof. “Yes, indeedy, it’s quite a view,” jokes Henry, who fits the Harvard Ph.D. stereotype the way Levis fit wingtips. “I’m a basic country guy at the end of the day. I say ‘howdy’ quite a lot.”

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.

All the extreme safeguards stand in direct contrast to Henry, an affable Midwesterner who moved his family from Chicago to downtown Hebron. “Well, it’s near the airport,” he says, by way of explanation.

As senior regional officer and vice president of the Cincinnati Fed, Henry runs the day-to-day operations of Fourth Street’s own Fort Knox. He and his 150 employees are responsible for safeguarding new bills delivered from the United States Treasury, as well as circulated bills trucked to the seven-story building by Greater Cincinnati banks that can no longer stuff the wads of cash inside their comparatively meager safes.

“We’ve got a big vault downstairs,” Henry says, waving a hand out in his animated style. “I can’t even tell you how much money is in it right this moment, but it’s a big amount.”

Beyond serving as a gigantic cash register, the Cincinnati branch of the Fed serves a number of other critical roles. “We supervise certain banks and companies that provide financial services, regulating loans; we help formulate economic policy back in Washington, D.C., and we do local research that flows back into the formulation of that policy. Cincinnati is so centrally located to much of the population of the United States, and this branch is responsible for a territory stretching from Lima down to the Tennessee border.”

Henry’s short list of priorities includes expanding the Fed’s outreach and community actions here, most especially focused on the increasing number of foreclosures. “With the housing market crisis and teetering financial systems, we have a vital role to play in (providing) information.” He’s been involved in setting up a “phone-a-thon” and home ownership center, has met with regional chambers and banks, and has even sent Federal Reserve workers into grade schools to educate youngsters on better managing their money.

Henry is here to feel your pain. Really. He’s been downsized twice in his life — once he was out of work for 17 months. That’s taught him some things — largely empathy, sincere empathy. “Anyone can be impacted by the economy,” he observes. “It changes people when they see the things they cherish, their homes, their credit, their children’s education fund, just go away.

“The person who gets downsized is not the same person again, even when he’s re-employed later.”

Inside Fort Knox on
Fourth Street

Henry offers an 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 carrying Glock pistols.

There’s enough money here to make Scrooge McDuck 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,” says one worker. “It can be the sensors detected blood on the bills, or something else. One bank works with a prison, and I won’t tell you where they found some of that money on the inmates.”

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.

Just before the founding of the Federal Reserve, the nation was plagued with financial panics which wreaked havoc on the fragile banking system. A “panic” occurred when people, fearful of rumors or market conditions, raced to their banks to withdraw their deposits (think the scene in the classic Jimmy Stewart movie It’s A Wonderful Life).

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.” In the case of Cincinnati, that would be chairman James Anderson, recently retired CEO of Cincinnati Children’s; Peter Strange of Messer Construction; Janet Reid of Global Lead Management Consulting; Donald Bloomer of Citizens National Bank; Daniel Cunningham of Long-Stanton Manufacturing Co.; Gregory Kenny of General Cable Corp., and Paul Poston of NeighborWorks Inc.

Who’s Minding the Mint

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.

But the office isn’t all about money. “Since I’ve been here as senior regional officer, I can’t say I’ve had a standard day here,” Henry says about his new role. “I started out last week in Pittsburgh and Cleveland. I sat on the executive leadership committee meeting (of the Fed), the people who actually run The Bank.” Then it was a meeting with Fifth Third Bank President Kevin Kabat, confabs with the Tristate congressional leadership, and finally a Queen City Club reception where Henry was being elected to a local board of directors. “Let’s not say which one till they actually count the votes,” he laughs.

A busy and ever-changing schedule, to be sure. “Sometimes,” Henry says, “this job is like sucking on the end of a fire hose.”

He brings an exuberance into the staid world of the Fourth Street depository that amazes even longtime employees. “He’s been like a breath of fresh air,” confides one worker. “You wouldn’t believe the difference he’s made here already.”

Certainly Henry is the outsider’s outsider. He’s never even worked for the Fed before, nor ever expected he would. “This (job) came out of the blue in June of this year,” he says. “At the interview, I didn’t even know I wouldn’t be a federal employee.”

That’s right, you heard it here. The Fed is an odd agency, quasi-governmental and yet private. “The Federal Reserve is a very unique institution; it has a public side and a private side,” Henry says. “We are private-sector employees. We are operated by the banks. We are paid by the financial institutions for the services we provide.”

So Henry wants it known that the Fourth Street institution isn’t whittling away your family’s take-home pay. “Truth be told, we are not a drain on taxpayers. We actually send money at the end of each year, our excess income, back to the Treasury.

“There is a very intense focus on the bottom line here. And we have a huge portfolio of securities that earn interest.”

Henry has spent his career in corporate America — the Ford Motor Co., Fannie Mae, PricewaterhouseCoopers — as well as some roles on Capitol Hill. “They told me they (the Fed) were looking for someone with experience in community outreach, policy making, a Ph. D. in economics, somebody who knows the housing market and automotive industry — really, it’s like they were reading the job description off my résumé.”

A self-described “flatlander by heart,” Henry is proud that he’s spent 35 of his 47 years in the Midwest, “and South, I guess, if you call Kentucky South.”

An aging red brick sits on Henry’s desk, a reminder of his family’s Kentucky roots. “My family were stonemasons in Frankfurt,” he says.

Henry doesn’t want to underestimate the role the Fourth Street Fed plays in helping to set monetary policy, and the role Cincinnatians play, as well. “The economic policy-making process isn’t done in a vacuum,” he notes. “We in this office get out in the community and talk to people … and serve as a conduit of information back to Washington, D.C. A lot of my conversations (there) are about what’s happening in Cincinnati.

“Being on the ground here allows us to be a regional voice, a local institution. No one else in the government has such an expanded local presence.”

Henry plans to further interact with community leaders on issues of poverty prevention and home foreclosures. He points to his parents and their “straight-shooting” Midwest values as his inspiration. “They’ve lived in the same house since 1968.”

“Common-sense solutions are the best solutions,” he says of his economic philosophy in respect to the monetary challenges the city and country face. “Not any highfalutin’ theory.”


The Henry File

Age: 47

Educated: Bachelor’s from Rockhurst University in Kansas City, Mo.; master’s and doctoral degrees from Harvard University
in Boston

Married: To Carmen, who runs a home business designing women’s hats (her fashions have been pictured in Ebony and Women’s Wear Daily, and adorn many a Derby Day socialite)

Children: Two sons, one studying journalism at the University of Missouri, the other biomedicine at Stanford University

His “Other Child”: The family pet, a “purebred mutt” named Max

Most Recent Position: Senior director of market economics and risk analysis at PMI Group, one of the nation’s largest mortgage insurers

Other Posts: At Ford Motor Co., Fannie Mae and Pricewaterhouse

Government Jobs: Senior economist with the Budget Committee in the U.S. House of Representatives; the Federal Housing Finance Agency; and the FDIC’s Resolution Trust Corp.