Roger Ferguson, CEO of TIAA, discusses the necessity for one more stimulus bundle

Roger Ferguson sees a bright light for investors ahead of him, but only at the end of a dark tunnel.

Ferguson, 69, is the President and CEO of TIAA. He is the former vice chairman of the Board of Governors of the US Federal Reserve System. He also represented the Federal Reserve in several international political groups and served on important committees of the Federal Reserve System.

He recently announced that he plans to retire from TIAA in March 2021 after 12 years with the finance firm.

The Biden government is reportedly now considering him for a top economic position.

Ferguson, one of the best-known black executives in the financial industry, has recently been talking about how capitalism in the US needs to be more inclusive and the dangers for Congress not to create another stimulus package.

Roger Ferguson

Michael Nagle | Bloomberg | Getty Images

If Ferguson is appointed to the Biden administration, he will be in charge of economic policy during a crisis that rivals the Great Depression. Unemployment claims this week were at their highest level in months.

In a recent Q&A with CNBC, Ferguson discussed the reasons for his optimism despite the dark 2020. He also spoke about how the crisis has disproportionately harmed people with skin color and people who want to withdraw in comfort. The interview has been compressed and edited for reasons of clarity.

CNBC: What do you think must be in the next stimulus package to help the millions of Americans who are struggling right now?

Roger Ferguson: Congress aggressively pushed the first round of stimuli earlier this year. If the Fed hadn’t moved aggressively, things would most likely have been much worse. To avoid another economic downturn, Congress should continue to negotiate a new package to expand unemployment benefits while providing direct assistance and assistance to individuals, states and local governments. Such support would help address the inequalities that the pandemic has exacerbated for vulnerable communities.

CNBC: The stock market was very unpredictable in 2020. Even with the country in its worst public health crisis in a century and unemployment at record levels, many people saw their 401 (k) spike. Why this separation between Wall Street and Main Street?

RF: Millions of people around the world are still grappling with the ongoing human and economic tragedy related to the pandemic and we must acknowledge that first. At the same time, a combination of aggressive US fiscal and monetary policies, optimism about vaccines, and the steady performance of some sectors, particularly global manufacturing and US housing, have allowed investors to have sunny expectations for the markets for 2021 to draw from 2020.

CNBC: Do you think there is reason to be optimistic?

RF: At TIAA, we see it as a bright light for investors, but only at the end of a dark tunnel. The next few quarters could be volatile, but the likely end of the health crisis should help distressed parts of the economy make a strong comeback, backed by considerable consumer resilience and unusually high savings rates.

CNBC: Before this crisis, many Americans struggled to save for the future. How did the pandemic affect the problem?

RF: The Covid-19 pandemic has only exacerbated this problem and many Americans are feeling financially fragile. Only 4 in 10 Americans feel they are well on their way to achieving their retirement goals. Unfortunately, these health and economic crises have affected the minorities the most. The private and public sectors need to come together to consider how they can help rebuild these communities to eradicate inequalities.

CNBC: How can people try to stay on track with their savings even in this volatile time?

RF: Plan for the long term. Guaranteed sources of income, including annuities, are an excellent option for those concerned about market uncertainty and volatility. Diversifying your portfolio can also help, but don’t try to follow the constant ups and downs of the market. In addition to protecting your retirement savings, experts recommend that you save about six months’ worth of living expenses in an easily available account that may not fluctuate with the markets.

CNBC: You just announced that you are retiring as CEO of TIAA. Many people are also currently in a transition phase, thinking about career changes and trying to figure out their next steps. What advice would you give them?

RF: I realize that my decision to retire is a privilege. Many Americans who have lost their jobs due to the coronavirus pandemic have had to adapt and take advantage of new opportunities. My advice – given to me by mom, a longtime school teacher – would be to look for opportunities that challenge you and give you a chance to learn. One of the things I have learned that can be helpful during a transition is to see your career like a climbing wall rather than a traditional career ladder. The way forward may not always be a straight line. Instead, it could be a series of vertical and lateral movements. The key is always to keep growing.

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