Paul Volcker: The Lion Lets Loose - By Charlie Rose
There has been chatter in recent months about Paul Volcker, the chairman of President Barack Obama's Economic Advisory Board, being muffled by the Administration—especially when it comes to his views on bank regulation. But that hasn't stopped Volcker from taking his argument for separating commercial and investment banking on the road, scolding bankers in
CHARLIE ROSE
What will economic growth look like in 2010?
PAUL VOLCKER
Economists are terrible at forecasting, but it's going to be a slog. The most recent figures are a little bit better than we would have expected, but that doesn't mean they're very strong.
And jobs?
Jobs are going to be slow to recover.
A permanent loss of jobs?
No, we shouldn't have a permanent loss of jobs, but we have a considerable adjustment process to go through here. We've got to restore investment, we've got to restore our manufacturing industry, not the old-fashioned manufacturing industry, but we have to do a better job at the new industries that are coming along—the so-called green economy. Other countries are ahead of us in production that's related to change.
...
You feel strongly that the financial system has gotten out of whack. Do you think the American political process is capable of fixing it?
The American political process is about as broken as the financial system. Therefore, one has to be a bit skeptical. Just to give you one little example, one unrelated to the financial crisis. Here we are on Dec. 29, almost a year after the Inauguration, and there is no Under Secretary of the Treasury. That should be an important position. How can we run a government in the middle of a financial crisis without doing the ordinary, garden-variety administrative work of filling the relevant agencies? The Treasury is an outstanding example of a broken system, but it's not the only one.
Is part of the problem that Congress is slow in the process of approving?
Slow is too fast a word to describe what's going on. The Administration is one quarter over, and it hasn't manned the ramparts of government yet.
So it's the Administration's problem? They haven't gotten their Executive Branch in place?
It's partly a reflection of the discord in government and extreme views on either side and fighting each other for every scrap of advantage.
In interviews in the past you said that's why we needed to change the political process; that's why you thought that candidate Obama was the best choice for President.
True. But has he been able to do that at this point? It doesn't look that way. I think that's unfortunate. I wish the Administration would pay more attention to what's needed to improve the ordinary functioning of government. We can't even fight a war with our own people any more. We've got to hire Blackwater. I think people have lost confidence in government, they've lost trust in government, and it shows. This isn't a question just of this Administration. It's been kind of a steady, downhill path.
Yes, but this Administration came in and said it would change. That was the mantra of the campaign. So what happened?
It shows you it's not that easy to change.
- Volcker: Government Makes Up 35% Of Gdp, Mortgage Markets Are Now A State 'subsidiary'
Former Fed Chairman Paul Volcker warned of the risks of an asset bubble forming given the incredible amount of liquidity the Bernanke Fed has injected into the market, even though he said banks are substantially stronger than before the crisis on Wednesday. ...
- The Great Bank Robbery - By Nassim Nicholas Taleb And Mark Spitznagel
For the American economy – and for many other developed economies – the elephant in the room is the amount of money paid to bankers over the last five years. In the United States, the sum stands at an astounding $2.2 trillion for banks that have filings...
- Volcker Pushes For Reform, Regretting Past Silence
JUST before the Fourth of July weekend, Paul A. Volcker packed his fishing gear and set off for his annual outing to the Canadian wilds to cast for Atlantic salmon. He left behind a group of legislators in Washington still trying to nail down a controversial...
- Ny Times Op-ed: How To Reform Our Financial System - By Paul Volcker
What we do need is protection against the outliers. There are a limited number of investment banks (or perhaps insurance companies or other firms) the failure of which would be so disturbing as to raise concern about a broader market disruption. In such...
- Hussman Weekly Market Comment: A Blueprint For Financial Reform
The tape that plays in Ben Bernanke's head appears to be a rather short phrase "We let the banks fail during the Great Depression, and look what happened." And then the tape repeats. The difficulty is that this story line ignores the distinction between...