There is understandable optimism from the fact that Paul Volcker, former Federal Reserve chairman, has been named to head a new White House board to search for ways to get the United States economy back on a firm footing. It’s agreed that we are snarled in an economic crisis of historic proportions and President-elect Barack Obama’s choice of Volcker to serve in the new post was a good move.
Volcker, 81, will be chairman of the President’s Economic Recovery Advisory Board, which will include experts from outside government. The unit will meet once a month to survey conditions and report to the new president.
The chairman has been interviewed extensively of late by such topflight media people as Charlie Rose, and he clearly has much to offer to the effort to rejuvenate our financial status.
The plain-spoken Volcker was appointed Federal Reserve chairman in August 1979 when then-president Jimmy Carter reported a “crisis of confidence” among the citizenry. Carter was hindered by the hostage crisis in Iran, and there were long lines at gasoline stations while inflation raged at more than 10 percent. Volcker is given credit by some for “throttling the economy to crush inflation,” and drew criticism for causing one of our worst recessions since the Great Depression.
The Fed chairman unleashed interest rates and began to cut down the quantity of money in the banking system. Barbed at first, he later was commended for his attacks on runaway prices. He resigned from the Fed job in 1987, before the stock market crash of that year. Yet it was generally agreed he did a fine job in his two terms with the Fed and the crash was not of his doing.
Volcker is noted for his financial expertise and independent thinking, and he carries a fine reputation for good money management. When announcing the appointment, Obama said, “Paul has served under both Republicans and Democrats and is held in the highest esteem for his sound and independent judgment. He pulls no punches.”
It is going to take the best punches Volcker and his panel can throw to stop the economic weakening and get things moving in the right direction. One of the major goals of the board, now and throughout its existence, will be to restore consumer confidence.
Volcker has voiced contempt for Wall Street risk-management behavior, and we can expect some new, and tough, restrictions for this and other harmful activities.
The United States has hundreds of able, experienced people to raise it out of the hole in which it now finds itself. Although not a new face in Washington and certainly not an agent of the “change” called for by Obama, Volcker may prove to be one of the president-elect’s finest appointments.