President Barack Obama might have done well to keep former Federal Reserve Chairman Paul Volcker in closer reach during his first year of office rather than rely on the dubious advice of Timothy Geithner and Lawrence Summers. Too late for that—but hopefully not too late for Volcker to help the president in his future dealings with Wall Street. —KA
Reuters via Google News:
Asked by the New York Times in October about reports he was losing sway with the Obama White House, Volcker retorted that he “did not have influence to start with.”
That made Volcker’s presence at the announcement all the more significant to showing Obama’s resolve to push the new regulatory approach that Wall Street appears set to fiercely oppose.
“Volcker being there was huge,” said Simon Johnson, a professor at the Massachusetts Institute of Technology and a former chief economist at the International Monetary Fund.
The bank announcement elated many of Obama’s liberal supporters, who have welcomed his tougher rhetoric in recent weeks toward the banking executives he referred to in December as “fat cats.”
Geithner and Summers, veterans of the Treasury Department in the Clinton administration, have been criticized by some liberal supporters of Obama who view them as too cozy with Wall Street. Legislation in 1999 tearing down the Depression-era Glass-Steagall law separating commercial and investment banking passed under their watch.
Obama’s new bank rules would not bring back Glass-Steagall but would revive its spirit.