Sunday, June 28, 2009

A Comeback for Paul Volcker?

Bloomberg's Yalman Onaran has a long profile of Paul Volcker out. It includes this perhaps telling anecdote:

The topic of conversation in the second-story Family Dining Room on a warm evening in April: President Barack Obama’s economic policies.

Obama sat at the head of the table, administration insiders arrayed along one side to his right. To his left, facing a French marble fireplace, were some of his harshest critics: Nobel laureates Joseph Stiglitz and Paul Krugman and Harvard University professor Kenneth Rogoff.

One chair on the insiders’ side was empty, according to attendees. It was reserved for Paul Volcker, the 81-year-old former Federal Reserve chairman who was an adviser to Obama during the campaign and now heads the President’s Economic Recovery Advisory Board, or PERAB. He was stuck at the White House gate, trying to convince guards that he was expected for dinner. His plane from New York had been delayed by a storm, and his security clearance to enter the building that day had expired. .. While he doesn’t have a full-time job, isn’t paid for his advice and lives in New York, the 6-foot-7-inch (2.01-meter) Volcker is hard to ignore.

Volcker...eventually made his way to the dinner table the evening of April 27...
There's always been two sides to Volcker, inflation fighter, but also Rockefeller operative.

Indeed, Onaran's profile contains an endorsement of Volcker by none other than David Rockefeller:
“He was brilliant, eminently logical, and steadfastly devoted to his work,” says David Rockefeller, 94, who hired the Princeton graduate to work as an economist at Chase Manhattan Bank in 1957 after a stint in the research department of the New York Fed.
Onran, also, details Volcker's revolving door career between government work and Rockefeller work, if there is a difference:

Volcker, who also received a master’s degree in political economy and government from Harvard University in Cambridge, Massachusetts, left Chase to become the director of financial analysis at the Treasury Department in 1962. He rose to deputy undersecretary the following year during the administration of Lyndon Johnson, returned to Chase in 1965 and, when Richard Nixon became president, rejoined Treasury as undersecretary for international monetary affairs.
Onran then goes on to suggest that Volcker is experiencing somewhat of a comeback in the Obama White House. Given what is coming out of the mouths of other Obama advisers, Volcker is probably a lesser evil. He, for example, knows that it is nutty to put so much new control in the hands of the Federal Reserve, as is part of Obama's recent regulatory reform proposal. Writes Ornan:

“Do we want to make the Federal Reserve the chief regulator too?” Volcker asked during a Bloomberg TV interview on April 29. “Maybe that’s going a little too far.”
Curiously, though, while I saw Volcker often being critical, on record, of Alan Greenspan's monetary policies, I have seen nothing on record by Volcker about Ben Bernanke's roller coaster money printing operations--even though it has been reported that Volcker has said that he believes Bernanke will be a only a one term Fed chairman.

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