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Women’s financial seminar held at The Sanctuary

By Staff | Apr 15, 2009

Island resident Roberta Puschel and Sanibel-Captiva Trust Company Chief Investment Officer Richard Pyle gave a talk to a group of ladies at The Sanctuary Clubhouse on April 7 about the Federal Reserve System and the current outlook for the global economy. It was the third in a four-part series of women’s seminars on financial topics sponsored by The Sanibel-Captiva Trust Company.

Puschel, who worked at the New York Federal Reserve for nearly 30 years as well as J.P. Morgan Chase & Co., gave an overview of the Federal Reserve System (known as “The Fed”). She explained that The Fed handles monetary policy rather than fiscal policy; it is independent of political parties; it arose to handle financial panics and is designed with an elaborate system of checks and balances; it is self-funded, with stock owned by private banks; it consists of the Board of Governors, 12 Federal Reserve Banks, and the Federal Open Market Committee (FMOC).

The audience enjoyed hearing about Puschel’s personal experience at a senior level of bank supervision and regulation. During her tenure, she worked with Fed Chairmen Paul Volcker and Alan Greenspan while overseeing 1,100 bank examiners. It was her job to stay one step ahead of bankers inventing exotic new financial instruments that could potentially disrupt markets.

She did not work under current Fed Chairman Ben Bernanke, but likes some of the measures that have come about in recent years.

“The Fed has become much more open,” said Puschel. “They announce what they are doing – clarity is important.”

Pyle gave a recap of the equities market during the past decade, noting the central role of real estate prices and lending practices on the health of the economy.

“In the old days banks held the mortgage of the borrower,” he said. The advent of securitization – packaging mortgages into pools and selling them to large investors – ultimately led to shoddy underwriting and put people in homes who were bad credit risks. When housing prices dropped, the losses to global banks and investors gave the economy a seismic jolt.

The Fed has responded to the crisis by flooding the financial markets with cash, said Pyle, and there are indications in the commercial paper market that lending has resumed and financial systems are more fluid. While noting the potential threat of future inflation and the weakening of the U.S. dollar, Pyle feels optimistic about a recovery.

“I think the Fed has done the right thing the economy is going to get better,” he said, advising investors to be prepared for short-term volatility and to “know what you own.”

Puschel believes there is enough cash parked on the sidelines to spark the economy and that it will come into play once the mood of fear gripping global markets subsides.

“The problem is not money – it’s confidence,” she added.

The ladies talked with Puschel and Pyle afterwards, thanking them for their presentations.

“They have done an outstanding job with these seminars,” said Sanibel resident Virgnia Stringer, Board Chair of First American Funds, a multi-billion mutural fund complex. “They do a terrific job of taking the complexities of today’s problems and making the average person able to understand it.”