Several pages to this article, but everyone should be pretty happy we're taking this guys advice, esp. the ones on the right too...this is the guy that made Reagan look good.


NEW YORK - In mid-January, a who's who of Wall Street gathered to hear Paul Volcker, the former Federal Reserve chairman whose role in the White House seemed at best unclear.

As the members of the Economic Club of New York tucked into their wild mushroom bisque and basil roasted chicken at the ornate Grand Hyatt ballroom in Midtown Manhattan, Volcker, 82, warned them against post-crisis complacency.

But few expected him to drive policy in Washington. Despite his gravitas and 6-foot, 7-inch frame, Volcker was struggling to make his presence felt in the administration of U.S. President Barack Obama. He appeared to have little sway on economic decision-making that was steered largely by two veterans of the Clinton administration: Lawrence Summers, the director of the National Economic Council, and Treasury Secretary Timothy Geithner.
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Yet just one week later the president unveiled a proposal that put Volcker at the center of his effort to overhaul the nation's financial regulatory system.

Standing in the blue-hued Diplomatic Reception Room beneath a portrait of George Washington, Obama advocated what Volcker had been urging for months ? banning commercial banks from engaging in proprietary trading or owning hedge funds or private equity funds.

"If these folks want a fight, it's a fight I'm ready to have," the president declared in a feisty eight-minute statement. The president, who was under enormous pressure to adopt a more combative stance toward Wall Street, referred to Volcker as "this tall guy behind me" and said he was naming the proposal after him.

The words were barely out of his mouth when the fight started. Financial industry lobbyists and Congressmen alike lined up to call the proposal "ill-conceived", "old-fashioned", "populist" and "dead on arrival."

In an interview with Reuters, Volcker said the rule would get at the heart of moral hazard ? the tendency of traders and financial executives to take large risks with the expectation of a government bailout if things go wrong.

"I don't want to protect institutions that are engaged in essentially speculative activity," he said. "The danger has been vastly increased by the reaction to the crisis where everybody was getting saved, to exaggerate a bit, whether they were banks, nonbanks, whether they were engaged in speculative activity or not. If they were big they got saved."

But the effort toward a broad overhaul of U.S. financial regulations suffered a major setback on Thursday after bipartisan talks in the Senate hit an impasse.

Critics of the Volcker Rule don't expect the White House to go to the mat for it. As evidence, they cite the fact that Obama is in an uphill battle to save healthcare reform and that it took more than a month for a scant five pages of legislative language on the proposal to emerge from the Treasury Department.

Image: Paul Volcker, Barack Obama
Charles Dharapak / AP
"My understanding is that the president has been perfectly clear that this [the Volcker Rule] is an essential part of a program," Paul Volcke said.

The White House insists it is as committed to the rule as it was the day the president announced it and Volcker said he sees no evidence to the contrary. "My understanding is that the president has been perfectly clear that this is an essential part of a program," he said.

Volcker said a watered down version of regulatory reform would be undesirable. "I'm not particularly interested personally in some legislation that passes because it's the only thing that can pass," he said. "I think the chances are still you'll get a sensible bill but I sure don't count it as certain."

Populist? Who, him?
For as long as any of his friends and associates can remember, Volcker has rarely stepped into the political fray. So they were surprised when he gave Obama a key public endorsement during his campaign for presidency.

During the 2008 campaign, Obama relied heavily on Volcker to help shape his response to the financial meltdown. Volcker's name surfaced in the media as a possible candidate for Treasury secretary or a senior White House adviser. Instead, Obama tapped him to lead a panel of outside experts advising the White House on economic matters.


Volcker, who works out of a suite of offices in Rockefeller Center in New York and only occasionally visits Washington, says he relishes his independence. He was assigned an office in the West Wing but almost never uses it.

"I don't want to be inhibited in what I say," he said. "I've been inhibited all my life. It's time to be uninhibited."

Cheap cigars, politics and the Volcker Rule - U.S. business- msnbc.com