NY Panel “Cautiously Optimistic” on Economic Recovery

Soaring fuel prices, struggling municipal governments, and the future of the housing market were among the topics addressed during a Wake Forest On Wall Street Roundtable: Outlook 2011, Feb. 23, at the New York Athletic Club.

The roundtable was produced by the Wake Forest On Wall Street alumni group and sponsored by Annaly Capital Management Inc. FOX Business News anchor and Wake Forest alumna, Dagen McDowell (’91), served as the moderator.

Panelists were cautiously optimistic about economic recovery in the United States, stressing a large amount of uncertainty due to changes in financial regulation through the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Jim Awad (P ’13), a managing director of Zephyr Management, said the United State is experiencing “stronger than expected cyclical growth and economic recovery within the context of huge secular headwinds.”

However, Michael Farrell (P ’10), the chairman, president and CEO of Annaly Capital Management said that Americans can expect to see a continued tightening of credit including “underwriting standards in place with 10-20% down payments and 750 and higher FICO scores.”

Political unrest in the Middle East is not expected to go away. Michael Berczuk (P ’14), a managing director and the head of U.S. Rates Banks and Servicers Distribution of UBS AG said that oil prices have risen more than 25% in recent weeks and “with talks of $4-5 per gallon gasoline prices by summer, you can see how fragile the economy is.”

Within the United States, politics are moving to a more centrist position, according to Todd Gibbons (’79), vice chairman and chief financial officer of Bank of New York Mellon Corp. He referenced the attitude of labor unions to making concessions on pensions and medical benefits. “We are moving the discussion so it’s not that we need to do something, now it’s how much and how we will actually do it. Don’t underestimate the American people and their response when you have to get something done,” he said.

In closing, Farrell said the financial crisis brought out the very best and worst in people and those with integrity survived and will continue to thrive. “Behavior counts, culture counts, character counts.” He emphasized that business is a noble profession, and “I have found in my life that giving gives back and multiplies.”