Dr. Jeff Lacker, president of the Fifth Federal Reserve Bank of Richmond, Va., offered a ray of sunshine for the nation’s economy in an appearance June 9 on the campus of The University of North Carolina at Pembroke.
Chancellor Meadors with former Charlotte Office Chair Jim Lowry
Business and consumer spending and housing are “showing signs of stabilizing,” and the economy will be in recovery by late 2009, said Lacker, a voting member of the Federal Open Market Committee which sets key bank interest rates. Rising oil prices and further tremors in the financial sector could derail this forecast, he added.
Dr. Lacker spent three days touring eastern North Carolina. His Pembroke visit followed a meeting with North Carolina Gov. Beverly Perdue, discussions with timber industry representatives and agribusiness and banking leaders, as well as stops at Fort Bragg and Seymour Johnson military installations. Dr. Lacker also spoke with lawmakers in Raleigh on June 10.
This was the University’s first visit in more than 10 years by a high ranking Federal Reserve team, although Richmond Fed officials routinely travel the district to meet constituents and learn firsthand about the communities and their economies.
Jim Lowry, a Pembroke native and former chair of the Board of Directors of the Charlotte Office of the Fed, was instrumental in bringing Dr. Lacker to the campus and for the community gathering. Lowry served for six years on the board from 2001 until 2007, and was chair for two of those years.
“I’ve been blessed with a great opportunity to serve the Federal Reserve,” said Lowry, who is an automobile dealer in High Point, N.C. “Serving the Federal Reserve has been one of the greatest experiences I’ve had.”
Dr. Lacker said it’s business and community leaders like Lowry and visits like this one that keep the Fed in touch with each of its 12 regions of the U.S.
Dr. Jeff Lacker, president of the Federal Reserve Bank of Richmond
“We have 12 banks in the U.S. for a reason,” he said. “Congress recognized the diversity of our national economy.”
Among the Federal Reserve contingent were: Dr. John Weinberg, director of research and senior vice president for the Bank of Richmond; Alan Crooker, vice president; Dr. Matthew Martin, senior vice president and Charlotte regional executive; Anne Macheras, vice president of the regional division of research; Steve Malone, assistant vice president of public affairs, Jewel Glenn and Ann Buhl, public affairs managers; Wanda Carter, a Pembroke native and member of the Charlotte public affairs staff, and Laura Fortunato and Jim Strader of corporate communications.
Dr. Ramin Maysami, chair of the Economics Department, hosted the event. He thanked Lowry for his support in bringing the group.
“There are many places they could have visited,” Dr. Maysami said. “It was fortunate they visited us on a very beautiful day, and they were eager to come afterwards.”
It was an important event for UNCP to host, he said.
“They have been in the news, so everybody knows the Federal Reserve,” Dr. Maysami said. “It’s good to see economic issues in the news.”
The group held a wide-ranging roundtable discussion with faculty of the School of Business and then met with members of the University and community. Dr. Lacker discussed the Federal Reserve System and its mission, discussed the current economic crisis and answered questions.
“Audiences never seem to be at a loss for questions for Federal Reserve officials,” Dr. Lacker said. “We’re on the front pages of newspapers more than we’d like.”
During the ongoing economic crisis, the spotlight fell, in part, on the Fed because of its role in monetary policy and setting interest rates.
“We are in a severe recession, deeper and longer than any since the Great Depression,” Dr. Lacker said. “It started in January 2008 and will last 18 months.
“We know enough and have done enough to prevent it from being as severe as the Great Depression, which was a three-year contraction followed by no growth for 6-7 years,” he continued.
The blame falls on an overheated housing market, fueled by low interest rates and new financing vehicles, and by “too big to fail” financial institutions which miscalculated risk, Dr. Lacker said.
“We’ll never have standards that low again,” he said of regulation of sub-prime and “low documentation” mortgages leading up to the crisis. “I expect new (regulatory) legislation from congress in the next 18 months.”
“There has been a lot of soul searching about this,” Dr. Lacker said. “It’s going to take a long time to sort this out.”
More than 75 attended the dinner and Dr. Lacker’s speech.
“As a whole I was very pleased,” Dr. Maysami said. “Dr. Lacker was very personable and frank.
“I thought he listened to people and was very open and answered questions in terms they could understand,” Dr. Maysami said. “We discussed student internship and further visits and I hope to follow up on that.”