Christine M Cumming: Macro overview of the United States Remarks by Ms Christine M Cumming, First Vice President of the Federal Reserve Bank of New York, at the European Economics and Financial Centre, London, 15 February 2011. *  *  *  It is a great pleasure to be here to speak to you today about recent developments in the U.S. economy. I’d like to thank Professor Hannah Scobie and the European Economics and Financial Centre for organizing the seminar in this beautiful historic setting, and thank the Member of Parliament, Geoffrey Clifton-Brown, for presiding over and sponsoring this meeting. The views I will express are my own and do not necessarily reflect the views of the Federal Reserve Bank of New York or the Federal Reserve System. I have organized my talk into six observations about the U.S. economy. First, in considering the nature of the recovery from the financial crisis and recession, which many call the “Great Recession,” it is important to take note of the severity of the downturn from which we are recovering. Even though the United States has experienced six consecutive quarters of positive growth of real gross domestic product (GDP) since the official end of the Great Recession, the level of output remains well below the business cycle peak. The economic history of such combined financial crisis and recession experiences is that recovery is often slow and protracted; this one seems no different.
The domestic legislative and regulatory requirements are largely in place, and firms have provided their plans to implement them in time for the government’s 2019 deadline. Firms are working to implement the plans. There are many challenges ahead. We will work closely with firms as they change their structures and transfer business activity, assets and liabilities between entities. They must manage the impacts on customers, employees and other stakeholders. The implementation process coincides with a period of heightened uncertainty before the UK – and therefore the banking system – adjusts to a new relationship with the European Union. I won’t pretend this is a perfectly happy coincidence: in an ideal world we would not restructure our banking system and extricate ourselves from the EU at the same time. But the execution risks of managing these changes simultaneously are outweighed by the benefits of increasing firms’ resolvability and removing the public subsidy from banks. So it is full steam ahead. Alongside ring-fencing, the other major reform which is progressing through implementation, and is key to making big banks resolvable without recourse to the taxpayer, is bail-in. Here in the UK work on this is being led by my colleague Sir Jon Cunliffe, and we will shortly publish our final policy. 5  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  5  At these two frontiers, and across the whole reform programme, we must secure the progress that has been made as memories of the last crisis fade.