"The Lion Lets Loose".....Charlie Rose interview with Paul Volker on Wall St. Reforms.

[KoKo]

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 Britain in early December and telling politicians in Germany that "this is no time for a return to business as usual." The former Fed chairman has also been hard at work leading a panel that will report back to the President early next year with proposals for tax reform. And at 82, he recently got engaged. We talked at Volcker's Manhattan apartment on Dec. 29.

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.

More of interview about changes to Wall St. at:

http://www.businessweek.com/magazine/content/10_02/b4162011026995.htm

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1. Recommend

[NJmaverick]

2. One of the better Q and As

So does this mean we should restore Glass-Steagall?

No. That's a false statement people make about my position. Glass-Steagall basically said banks cannot underwrite corporate securities or deal with corporate securities. But I would let commercial banks do underwriting of corporate customers. So you could argue that what I propose is somewhat in the spirit of Glass-Steagall in making a distinction between capital-market activities and trading activities and banking activities. But it is not specifically going back to Glass-Steagall.