President Jeff Lacker

Photo of President Jeffrey M. Lacker

Dec. 21, 2006

Economic Outlook

It's a pleasure to be here in Charlotte again this year for the Annual Economic Conference. I am honored to be invited back for a third appearance, particularly after my forecasting performance last year. Before I begin, I owe you the usual disclaimer that these views are my own and are not necessarily shared by my colleagues around the Federal Reserve System. For those of you who have followed my voting record, however, this should come as no surprise.

Photo of President Jeffrey M. Lacker

Dec. 1, 2006

How Should Regulators Respond to Financial Innovation?

The subject of this panel is "Financial Markets and Growth." There is now quite a substantial literature devoted to understanding how improvements in the effectiveness of the financial sector can and do contribute to growth and economic well-being in developing countries. My focus will be on the innovations in financial markets and practices that have been particularly striking in the United States over the last couple of decades, and the key benefits of those innovations. We've seen tremendous changes in financial arrangements in recent years, particularly with regard to the ways in which financial markets allocate risk; derivative markets have made risks increasingly divisible and tradable, and consumers have seen vastly expanded opportunities in credit markets. I believe these changes have produced noteworthy economic benefits. Many observers, however, acknowledge the benefits but believe the recent wave of financial innovation also has contributed to increasing financial fragility. The proliferation of new instruments seems to have made it easier for someone to accumulate large risk exposures and harder for counterparties to evaluate them.

Photo of President Jeffrey M. Lacker

Oct. 30, 2006

Monetary Policy Tactics and Strategy

Thank you for that kind introduction, Don. It is a pleasure to be with this esteemed group today. This morning, I’d like to talk about monetary policy, but before I do, I need to note that, as always, the views I express are my own, and do not necessarily coincide with the views of my colleagues within the Federal Reserve. I’d like to talk about monetary policy from two different perspectives: tactics and strategy. These obviously are two pertinent aspects of any sustained planning or decision-making endeavor, whether it involves public policy or the private goals of businesses or households. By tactics, I mean the decisions we make and the actions we take on a day-to-day, month-to-month, or, in the case of the Federal Open Market Committee, twice-a-quarter basis. Our most visible tactical decision is our choice of the federal funds rate. You have probably noticed that I have disagreed with many of my colleagues on this tactical choice at recent meetings, and I will say a few words later on about why.

Photo of President Jeffrey M. Lacker

Oct. 11, 2006

The Regional Economic Outlook

It is a pleasure to be with you today to discuss the economic outlook for the region. I work, as Barbara’s kind introduction noted, at the Federal Reserve Bank of Richmond. The fact that our nation’s capital lies within the Richmond Federal Reserve District, rather than the other way around, is an odd byproduct of decisions made over 90 years ago. When establishing the Federal Reserve System as the nation’s central bank, Congress created a confederation of regional banks, rather than a single, centrally located bank. The founding organizers then made Richmond the headquarters for the Fifth Federal Reserve District, which covers the area from West Virginia and Maryland in the North down to the Carolinas in the South. The founders’ motivating vision was that the nation was better served by an institution that was closely linked to the diverse economies that make up our country. And so, one of our key responsibilities at the Reserve Banks is to understand local economic conditions around our Districts. Of course, the Fed is well represented inside the beltway, since Washington is the home of the Board of Governors of the Federal Reserve System, the entity that oversees Reserve Bank activities. They are kind enough to let me roam Washington at will, and we are kind enough to cut their paychecks for them.

Photo of President Jeffrey M. Lacker

May 18, 2006

The Evolution of Consumer Finance

At the outset this morning I would like to congratulate you: 2005 marked the first year in the history of the federal deposit insurance program in which there were no failures of FDIC-insured institutions. While the banking industry clearly has benefited from a relatively healthy macroeconomic environment, I think the lack of bank failures last year is strong evidence that supervisory agencies — both state and federal — have been doing an outstanding job. In fact, one could argue that we have done too good a job, since, as our recently retired Fed Chairman was fond of observing, the optimal number of bank failures is certainly not zero, the point being that risk-taking is an essential part of banking, and even if our banking system as a general matter is taking only prudent, well-managed risks, there may still be some failures from time to time. Furthermore, risk is an inherent part of innovation, and when banks are trying new things, some will succeed and some will not. But innovation is vital to the continued growth and progress of the industry and its ability to provide the public with ever more useful and efficient financial services over time. I would like to note, as usual, that the views expressed are my own and are not necessarily those of my colleagues in the Federal Reserve System.

Photo of President Jeffrey M. Lacker

April 4, 2006

The Economic Outlook

It is a pleasure to speak on the economic outlook this morning, in part due to this distinguished Ohio Valley audience, and in part because the outlook is so encouraging. Growth is proceeding on a solid pace this year, and inflation is low and stable. Moreover, our economy has withstood several substantial shocks over the last several years, and yet has remained on course. So, I think we have abundant reason to be grateful for a quite positive economic outlook. Before I begin reviewing that outlook, however, I would like to note, as usual, that the views expressed are my own and are not necessarily those of my colleagues in the Federal Reserve System.

Photo of President Jeffrey M. Lacker

March 29, 2006

Central Bank Credit in the Theory of Money and Payments

I’m honored to have the opportunity to speak at this conference, although I must admit that I find the conference’s title a bit puzzling. I can certainly think of more than two conferences on payment economics. Why, the Richmond Fed alone has sponsored two; one in 2000 and one way back in 1987.

Photo of President Jeffrey M. Lacker

Feb. 14, 2006

Transition and Continuity at the Federal Reserve

I would like to talk to you tonight about the evolution in the way the Federal Reserve goes about conducting monetary policy. As my title suggests, one theme is that a transition is taking place. Of course, the most striking transition at the Federal Reserve this year is the change in leadership. On January 31, Federal Reserve Board Chairman Alan Greenspan served his last day in office and chaired his last meeting of the Federal Open Market Committee. His successor, Ben Bernanke, took over the following day, and tomorrow morning, he delivers his first testimony to Congress as chairman.

Photo of President Jeffrey M. Lacker

Jan. 20, 2006

The Economic Outlook

It is a pleasure to be with you today to discuss the economic outlook for 2006 and beyond. It is a pleasure, in part, because the economic outlook is fairly encouraging. Growth is on a solid footing, despite this year’s run-up in energy prices and the disruptions of a devastating hurricane season. And after a brief pause this fall, employment is expanding again at a healthy pace, consumer spending continues to grow briskly, and business investment spending is robust. Granted, housing activity seems to be softening, and at least some potential price level pressures remain, so it may be too soon to break out the champagne. But inflation expectations remain contained, and we at the Fed are well-positioned to resist inflation pressures, should they emerge.

Photo of President Jeffrey M. Lacker

Jan. 18, 2006

The Economic Outlook

It is a pleasure to be with you today to discuss the economic outlook for 2006 and beyond. It is a pleasure, in part, because the economic outlook is fairly encouraging. Growth is on a solid footing, despite this year’s run-up in energy prices and the disruptions of a devastating hurricane season. And after a brief pause this fall, employment is expanding again at a healthy pace, consumer spending continues to grow briskly, and business investment spending is robust. Granted, housing activity seems to be softening, and at least some potential price level pressures remain, so it may be too soon to break out the champagne. But inflation expectations remain contained, and we at the Fed are well-positioned to resist inflation pressures, should they emerge.

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