Published: Wed, December 11, 2019
Markets | By Otis Pena

Charismatic central banker and author of the 'Volcker rule' dies

Charismatic central banker and author of the 'Volcker rule' dies

Former Chairman of the Federal Reserve Paul A. Volcker '49, who led the effort to suppress inflation throughout the late 1970s and early 1980s, has died at the age of 92.

Although the panel's work was upstaged by criminal indictments, some of Volcker's recommendations were incorporated into the Sarbanes-Oxley Act passed by the Congress in 2002.

Powell, who has been heavily criticised by President Donald Trump for keeping monetary policy tight and restricting growth, was a year ago advised by Volcker to ignore brickbats from the White House. Volcker carried out massive credit tightening to contain the soaring prices, pushing interest rates up to around 20 percent.

Nonetheless, the policy worked - not least because it ensured that the economy would not soon doubt the Fed's willingness to pull any and all monetary levers necessary to keep employment and inflation on track. Home builders put postage stamps on bricks and on 2-by-4 wooden planks and mailed them to the Fed to protest how super-high interest rates had wrecked their businesses.

One of the mailed 2-by-4s ended up with an enduring legacy at the Fed: David Wilcox, a young staffer under Volcker who later rose to direct the Fed's research and statistics division, said he received one of the 2-by-4s from Larry Slifman, a former senior economist in the division, and kept it on his desk until his retirement previous year.

But Volcker kept monetary policy tight and Reagan resorted to huge budget deficits to funds tax cuts, driving up the U.S. debt to GDP ratio to record highs. The vehicle dealers, stuck with a lot of unsold cars, did the same with the auto keys. Volcker left the Fed on August 11, 1987, succeeding Alan Greenspan. Angry farmers, struggling with high debts, drove their tractors to Washington and blockaded the Fed's headquarters.

Born in 1927, Volcker served in key positions, including president of the Federal Reserve Bank of NY.

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The 47-year-old remains free on a $10-million bail and resides at one of the mansions in Vancouver she co-owns with her husband. Supreme Court during a lunch break from a hearing, in Vancouver, on Thursday Oct. 3, 2019.

In 1999, he led a committee of Jewish groups and Swiss banks to resolve issues over unclaimed bank accounts of Holocaust victims, eventually negotiating a deal of $ 1.25 billion. The United Nations assigned him to look into allegations of corruption in a UN program to provide food aid to Iraq.

Born September 5, 1927, in Cape May, New Jersey, Volcker was educated at Princeton, Harvard and the London School of Economics.

His survivors include his second wife, Anke Dening, and two children.

In working to help the U.S. economy recover from the 2008 crisis, he proposed what became known as the "Volcker Rule" that restricted banks from making high-risk investments with depositors' cash.

President Barack Obama introduces the President's Economic Recovery Board chaired by former Federal Reserve head Paul Volcker (L) in the East Room of the White House in Washington on February 6, 2009.

Volcker also stepped up oversight of financial institutions, strictly limiting their investments in hedge funds. Volcker had little sympathy for the big banks following the financial crisis, which has need a bailout taxpayers of the Great Wall.

The only useful financial innovation he'd seen in years, he said, was the ATM.

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