Volcker: Cheap Cigars & Smart Politics
“I don’t want to protect institutions that are engaged in essentially speculative activity. The danger has been vastly increased by the reaction to the crisis where everybody was getting saved, to exaggerate a bit, whether they were banks, nonbanks, whether they were engaged in speculative activity or not. If they were big they got saved.”
-Paul Volcker, former Federal Reserve Chair
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Reuters takes a fascinating look at Paul Volcker in the delightfully titled Cheap cigars, politics and the Volcker Rule.
“I don’t want to be inhibited in what I say,” he said. “I’ve been inhibited all my life. It’s time to be uninhibited.”
No one would accuse him of holding back. Volcker has criticized what he calls the “reform lite” of congressional regulatory reform proposals. And he has kept a hectic travel schedule that belies his age, in Canada one day and Germany the next, as he seeks to drum up international support for a revamping of the financial system.
The people who know him best say outspokenness is part of the package. “He doesn’t temper his remarks as much as he might have in the past,” said his daughter, Janice Volcker Zima. “In his view, he’s old and it doesn’t matter anymore. He thinks (the risk of another crisis) is really dangerous and people need to do something about it.”
Friends say the former Fed chairman was surprised when Obama named the Volcker Rule after him. The president’s fiery, anti-Wall Street rhetoric in the Diplomatic Reception Room in January catapulted Volcker into the role of populist hero.
Well worth a few minutes of your weekend . . .
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Source:
Cheap cigars, politics and the Volcker Rule
Caren Bohan and Kristina Cooke
Reuters, Mar 12, 2010 EST
http://www.reuters.com/article/politicsNews/idUSTRE62B2YN20100312
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March 13th, 2010 at 11:01 am
Barry, good morning.
It is pretty hard for Paul Volcker to escape the “populist” label, given the article’s folksy description of him, his association with a populist President and the simplicity of the message he is promulgating. The last quote in the article has a certain truth and surely resonates with people who are unemployed or potentially unemployed. If the Volcker Rule or some incarnation of it does not pass, I believe the results will be manifested as soon as November, with all the good and bad that goes along with that scenario.
William Donaldson as a member of Mr. Volcker’s committee, eh? Did he not have some hand in the banks’ levering up process? I would be at least, a little skeptical of anything coming from a working group which included his participation.
Best regards,
mcrcr4
March 13th, 2010 at 11:54 am
Volcker was used as cover and a decoy, and then summarily tossed aside by the administration — yet he never called them on it. The time for him to speak up was long ago. Sorry, but his credibility is waning….
March 13th, 2010 at 12:21 pm
Talk , talk, talk…..but can anyone actually DO a damned thing to Fuld, geithner,orszag,
bernanke, summers, paulson, greenspan, rubin, friedman, frank, thain, dodd,mozillo,o’neal,o’meara, callin, gensler, cassano, blankfein, yellin, shapiro, clinton, bush, kashkari, and the other perpetraitors in The Tribe????
March 13th, 2010 at 1:19 pm
Volcker is Obama’s beard.
Here he is on the Jay Leno Show, months after taking office and to this day, still not having launched any type of investigation that would lead to the conclusion about criminality below.
The President certainly sounds very, ummm…, uninformed, especially in light of this Lehman fraud, and likely knowledge of his Treasury Secretary.
“LENO: I just read today about Merrill Lynch. They handed out $3.6 billion — it’s not even million anymore, it’s billions in bonuses. I know it would make me feel good — shouldn’t somebody go to jail? (Laughter and applause.) I say that because I watch those people in New York, even people who had lost everything — when Bernard Madoff went to jail, at least they felt they got something.
THE PRESIDENT: Right. They got some satisfaction. Here’s the dirty little secret, though. Most of the stuff that got us into trouble was perfectly legal.”
http://www.huffingtonpost.com/2009/03/20/obama-on-tonight-show-wit_n_177206.html
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EDITOR: That was March 2009
March 13th, 2010 at 5:49 pm
I can’t help but think that BR and TBP are helping in channeling his audience in being the wind beneath Volcker’s wings.
March 13th, 2010 at 11:08 pm
Yes, that was March 2009. But why would Obama state that all was perfectly legal if that was not a rehearsed party line? Onwwhat basis could he make that call?
March 14th, 2010 at 12:51 am
The Reuters article is notably sloppy. First, it mischaracterizes the Volker Rule as ” banning commercial banks from engaging in proprietary trading or owning hedge funds or private equity funds.” No mention is made on the other half of the Rule, a size cap on Big Finance.
Second, the article (1) incorrectly speaks of the Rule’s “banning” prop trading. In Volcker’s own presentation of the Rule (NY Times op-ed, 1-31-10), Volcker (a) sought to “limit” (not “ban”) prop trading and (b) admitted that the definition of actionable prop trading was vague. The article fails to mention the vagueness here, just as, of course, it (2) fails to mention the vagueness of the proposed size cap. Volcker even specifically said that there could be no return to the small-bank regime of Adam Smith.
Third, the article fails to note that whatever of worth the Volcker Rule might offer has already been preemptively qualified by Mr. Geithner, who basically gave a not-to-worry nod to Big Finance. The Volcker rule, all were assured, is entirely consistent with the Administration’s approach before the Volcker Rule was revealed.
Fourth, the article retails, but does not confirm, the Administration’s explanation of the suspicious circumstance that the Volcker Rule suddenly made its appearance as part of the Administration’s faux “populism” offensive in the wake of the Massachusetts senatorial setback. The Administration’s explanation of the timing–just a coincidence, it was in the works all along–should not have been retailed without scrutiny. These folks are highly polished liars, you know.
There is a psychological dimension to the Volcker lionization purveyed by the article, a dimension I do not expect two poor financial reporters to glean. It is this: How could a luminary of reputed integrity such as Paul Volcker allow himself to be used as a fig leaf for the Wall St.-friendly machinations of the Obama Administration? Conjecture: Volcker is very old, and approaching death. This will do strange things to a fellow. He might delude himself into thinking that his contribution to the country is being taken seriously; a legacy act, as it were. He might even sense that he is being used, but rationalize the experience as, after all, laying down a marker for future reformists. Volcker obviously enjoys the attention he is receiving as a member of the higher circles. Contrast this to the musings of a man of the same age in a nursing home.
March 14th, 2010 at 5:24 am
Conjecture: soloduff is clearly an unseasoned young snot, born in Nirvana generation, a stupid entertainer. Ageism is bloody absurd; get your mind right. You missed the class on respecting your elders.
Social promotion didn’t work for your lot.
March 14th, 2010 at 4:31 pm
@ToNYC “Dogs bark at what they don’t know.” –Heraclitus of Ephesus.
As to your “ageism,” I have been on Social Security for a number of years.
Care to guess my weight?