We're in Trouble When the Radical Is Paul Volcker

[depakid]

You couldn't blame Paul Volcker for feeling ill-used. He was one of the first of the financial Brahmins to endorse Barack Obama, back when Hillary Clinton was a sure thing for the nomination. Volcker was an earlier adviser to Obama than Larry Summers, Tim Geithner, Bob Rubin, or the rest of the Wall Street gang. Then, after Obama became the Democratic nominee, Volcker was trotted out as a senior advisor and his prestigious name was dropped for a top administration post.

But then the dust settled, Volcker was given a largely ceremonial position as head of an advisory committee that didn't even meet until May, and his advice was largely ignored. Volcker's wise counsel was for much tougher regulation, including the restoration of the Glass-Steagall wall between commercial regulation and more speculative activities such as securities underwriting and proprietary trading -- a wall whose dismantling in 1999 laid the groundwork for many of the abuses that led to the great financial collapse.

This counsel ran counter to the views of Larry Summers and Tim Geithner. Only when Obama found himself in political trouble in December and January, as a president who seemed hopelessly in bed with Wall Street, did the administration turn to Volcker.

Volcker is no radical. He is the former Fed chairman who raised short term interest rates to 21.5 percent as a cold-bath cure for inflation. He has a tightwad's view of monetary policy, even in a severe recession. But he has been around long enough to know that Wall Street speculators are capable of terrible mischief when regulations are dismantled. When the most radical person on the scene is Paul Volcker, it tells you just how politics have moved to the right.

During the months of his internal exile in the Obama administration, the old lion hadn't been just licking his wounds. Volcker turned out to be a better organizer than Obama. He organized several other senior eminences to support his call to restore Glass-Steagall, including Nicholas Brady, treasury secretary under Bush I, Bill Donaldson, SEC chair under Bush II, and Roger Altman, Robert Rubin's former deputy. Volcker testified. He gave tough speeches -- of the kind President Obama should have been giving.

More: http://www.huffingtonpost.com/robert-kuttner/were-in-trouble-when-the_b_489260.html

[glowing]

1. How much Econ does the President really know.. He's a smart man.

I'm sure he studied the Depression era. I'm sure that he realizes the govt unemployment numbers are fudged and aren't the real deal... So, it leaves me wondering how much he really does care about the avg person..

[Demeter]

2. The President (and Rahmbo) Knows Little (and Cares Less)

And he's just used Volcker, rolled him out to quiet the peasants, then ignored him, AGAIN.

At this point, whether it's Rahm, Geithner, Summers, or Obama himself, it really doesn't matter any more. The problem is not being addressed with anything except lip service, the criminals get off with the loot, scot-free, and we get screwed.