Volcker Said - And His Views
Paul Volcker, the 81-year-old former chairman of the Federal Reserve, and a top economic adviser to President Barack Obama said: "Not only the lack of understanding of the global financial meltdown, but the shocking speed with which it had spread across the world.
I don't remember any time, maybe even the Great Depression, when things went down quite so fast.
One year ago, we would have said things were tough in the United States, but the rest of the world was holding up.
The rest of the world has not held up.
It's broken down in the face of almost all expectation and prediction.
Stronger regulations are needed to protect the world economy from such future shocks.
" Volcker is also concerned about the amount of power central banks, treasuries and regulatory agencies have acquired, while trying to contain the meltdown.
While he assured of his confidence that capitalism will survive: "It is evident in the United States, and not just in the United States, the central bank is taking on a role that is way beyond what a central bank should be taking.
He stressed the importance of international cooperation in creating a new regulatory framework, particularly for major banks that operate across national boundaries -- the reverse of what's happened in recent years.
" And while major banks should be more tightly controlled and less able to make the sort of risky bets that led to their current debacle, there should also be more oversight of some kind for hedge funds, equity funds and the remaining investment banks.
He scoffed at the notion that those entities must be free to innovate -- stating that financial "innovations" like asset backed securities and credit default swaps have brought few benefits.
The most important "innovation" in banking for most people in the last 20 or 30 years, he maintained, is the automatic teller machine.
I don't remember any time, maybe even the Great Depression, when things went down quite so fast.
One year ago, we would have said things were tough in the United States, but the rest of the world was holding up.
The rest of the world has not held up.
It's broken down in the face of almost all expectation and prediction.
Stronger regulations are needed to protect the world economy from such future shocks.
" Volcker is also concerned about the amount of power central banks, treasuries and regulatory agencies have acquired, while trying to contain the meltdown.
While he assured of his confidence that capitalism will survive: "It is evident in the United States, and not just in the United States, the central bank is taking on a role that is way beyond what a central bank should be taking.
He stressed the importance of international cooperation in creating a new regulatory framework, particularly for major banks that operate across national boundaries -- the reverse of what's happened in recent years.
" And while major banks should be more tightly controlled and less able to make the sort of risky bets that led to their current debacle, there should also be more oversight of some kind for hedge funds, equity funds and the remaining investment banks.
He scoffed at the notion that those entities must be free to innovate -- stating that financial "innovations" like asset backed securities and credit default swaps have brought few benefits.
The most important "innovation" in banking for most people in the last 20 or 30 years, he maintained, is the automatic teller machine.
