Former Fed Chair Paul Volcker dies at 92
Former Federal Reserve Chairman Paul Volcker, who conquered the raging, double-digit inflation of the 1970s and championed tougher Wall Street regulation, has died at the age of 92.
Volcker, who led the central bank from 1979 to 1987, was a giant in the financial world, both figuratively and literally, standing at 6 feet, 7 inches. His legacy includes an eponymous regulation mandated by the landmark 2010 Dodd-Frank Act, the “Volcker rule,” which prevents banks from using customer deposits to make speculative short-term trades for their own profit.
His efforts to fight runaway inflation that led to a crippling, double-dip recession in the early 1980s, are often cited as a prominent example of why the Fed should remain independent from short-term political pressures.
A Volcker predecessor, Arthur Burns, was pressured by President Richard Nixon in the lead-up to the 1972 presidential election to keep interest rates low, which eventually contributed to the rapid rise in prices. When Volcker took over, he ultimately raised interest rates to as much as 20 percent to combat inflation.
"I am deeply saddened by the passing of Paul Volcker," Jerome Powell, the current Fed chair, said in a statement. "He believed there was no higher calling than public service. His life exemplified the highest ideals–integrity, courage, and a commitment to do what was best for all Americans. His contributions to the nation left a lasting legacy."
Volcker worked in the Treasury Department under Presidents John F. Kennedy, Lyndon B. Johnson and Nixon, and served as head of the powerful New York Fed before being nominated as chairman of the Fed board by President Jimmy Carter. He also spent several years working at Chase Manhattan Bank, now a part of JPMorgan Chase.
Volcker earned his bachelor's degree from Princeton University and a master's degree in political economy and government from Harvard University. He attended a Ph.D. program at the London School of Economics but never completed that degree.
In recent years, the former Fed chief has frequently weighed in on matters of financial regulation, including the Volcker Rule. After regulators appointed by President Donald Trump finalized an overhaul of that rule that would give banks more leeway to make risky bets in markets, Volcker warned that they were gutting meaningful restrictions.
“I understand that well-compensated industry lobbyists have long sought to weaken the Volcker Rule, claiming that it has reduced market liquidity and gravely damaged the prospects for economic growth,” Volcker wrote. “Yet credible studies show that overall market liquidity remains strong and has increased in recent years.”
He also pointed to strong bank profits, paired with hefty shareholder payouts and healthy loan growth.
“These facts belie any justification for the new rule,” Volcker wrote. “It bolsters the views of skeptics who believe that the ‘simplification’ effort was merely a ploy to weaken the core elements of the reform.”
