Paul Volcker

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Paul Volcker
Paul Volcker

Assumed office 
February 6, 2009[1]
President Barack Obama

In office
August 6, 1979 – August 11, 1987
President Jimmy Carter
Ronald Reagan
Preceded by G. William Miller
Succeeded by Alan Greenspan

In office
May 2, 1975 – August 5, 1979
Preceded by Alfred Hayes
Succeeded by Anthony M. Solomon

Born September 5, 1927 (1927-09-05) (age 81)
Cape May, New Jersey
Political party Democratic
Alma mater Princeton University
Harvard University
London School of Economics
Profession Economist

Paul Adolph Volcker (born September 5, 1927) is an American economist. He was the Chairman of the Federal Reserve under United States Presidents Jimmy Carter and Ronald Reagan (from August 1979 to August 1987). He is currently chairman of the newly formed Economic Recovery Advisory Board under President Barack Obama.[2]


[edit] Early life

Volcker was born in Cape May, New Jersey and grew up in Teaneck, New Jersey, where his father was the township's first Municipal manager. Volcker graduated from Teaneck High School.[3]

Volcker's undergraduate education was at Princeton University; he graduated in 1949. He earned his M.A. in political economy from Harvard University's Graduate School of Arts and Sciences and Graduate School of Public Administration in 1951 and then attended the London School of Economics from 1951 to 1952 as a Rotary Foundation Ambassadorial Fellow.

Volcker has received honorary degrees from several educational institutions including: University of Notre Dame, Princeton University, Dartmouth College, New York University, University of Delaware[4], Fairleigh Dickinson University, Bryant College, Adelphi University, Lamar University, Bates College (1989), Fairfield University (1994), Northwestern University (2004), Rensselaer Polytechnic Institute (2005), Brown University (2006), and Georgetown University (2007).[citation needed]

[edit] Career

In 1952 he joined the staff of the Federal Reserve Bank of New York as a full-time economist. He left that position in 1957 to become a financial economist with the Chase Manhattan Bank. In 1962 he joined the U.S. Treasury Department as director of financial analysis, and in 1963 he became deputy under-secretary for monetary affairs. He returned to Chase Manhattan Bank as vice president and director of planning in 1965.

From 1969 to 1974 Mr. Volcker served as under-secretary of the Treasury for international monetary affairs. He played an important role in the decisions surrounding the U.S. decision to suspend gold convertibility in 1971, which resulted in the collapse of the Bretton Woods system. In general he acted as a moderating influence on policy, advocating the pursuit of an international solution to monetary problems. After leaving the U.S. Treasury, he became president of the Federal Reserve Bank of New York from 1975 to 1979, leaving to take up the chairmanship of the Federal Reserve in August 1979.

In 1975, Mr. Volcker also became a senior fellow in the Woodrow Wilson School of Public and International Affairs at Princeton University.

[edit] Chairman of the Federal Reserve

Paul Volcker, a Democrat[5], was appointed Chairman of the Federal Reserve in August 1979 by President Jimmy Carter and reappointed in 1983 by President Ronald Reagan.[6]

Volcker's Fed is widely credited with ending the United States' stagflation crisis of the 1970s. Inflation, which peaked at 13.5% in 1981, was successfully lowered to 3.2% by 1983.

The federal funds rate, which had averaged 11.2% in 1979, was raised by Volcker to a peak of 20% in June 1981. The prime rate rose to 21.5% in '81 as well. [[1]]

These changes in policy contributed to the significant recession the U.S. economy experienced in the early 1980s, which included the highest unemployment levels since the Great Depression. Volcker's Fed also elicited the strongest political attacks and most wide-spread protests in the history of the Federal Reserve (unlike any protests experienced since 1922), due to the effects of the high interest rates on the construction and farming sectors, culminating in indebted farmers driving their tractors onto C Street NW and blockading the Eccles Building.[7]

[edit] Post-Fed

After leaving the Federal Reserve in 1987, he became chairman of the prominent New York investment banking firm, J. Rothschild, Wolfensohn & Co., a corporate advisory and investment firm in New York, run by James D. Wolfensohn, who was later to become president of the World Bank.

In April 2004, the United Nations assigned Volcker to research possible corruption in the Iraqi Oil for Food program. In the report summarising its research, Volcker criticized Kojo Annan, son of UN Secretary-General Kofi Annan, and the Swiss company Cotecna Inspection SA, Kojo's employer, for trying to conceal their relationship. He concluded in his March 2005 report that "there is no evidence that the selection of Cotecna in 1998 was subject to improper influence of the Secretary General in the bidding or selection process".[8] However, while Volcker did not implicate the Secretary General in the selection process, he did cast serious doubt on Kofi Annan, whose "management performance...fell short of the standards that the United Nations Organization should strive to maintain."[9] Volcker was a director of the United Nations Association of the United States of America between 2000 and 2004, prior to his being appointed to the Independent Inquiry by Kofi Annan.

As of October 2006, he is the current Chairman of the Board of Trustees of the influential Washington-based financial advisory body, the Group of Thirty, and is a member of the Trilateral Commission. He has had a long association with the Rockefeller family, not only with his positions at Chase Bank and the Trilateral Commission, but also through membership of the Trust Committee of Rockefeller Group, Inc. (RGI), which he joined in 1987. That entity managed, at one time, the Rockefeller Center on behalf of the numerous members of the Rockefeller clan. He currently serves as Chairman of the Board of Trustees of the International House in Manhattan, NY. He was a founding member of the Trilateral Commission.

In January 2008, he endorsed Democratic Presidential Candidate Barack Obama for President.[10]

On April 8, 2008, he was the featured speaker at "The Economic Club of New York" and spoke about the issues and causes of the 2008 US recession, and critiqued the 2008 US financial system and the 2008 Federal Reserve policies.[11]

He is today an economic advisor to President Barack Obama.[12][13] Mr. Volcker will head the President's Economic Recovery Advisory Board[14].

[edit] Personal life

As a child, Volcker attended his mother's Lutheran church, while his father went to his Episcopal church. Volcker married Barbara Bahnson, the daughter of a physician, on September 11, 1954. She died on June 14, 1998, having suffered from lifelong diabetes, as well as rheumatoid arthritis. They had two children, Janice, a nurse and a Georgetown University graduate,[15] and James, a research assistant and a New York University graduate[16] who was born with cerebral palsy, as well as four grandchildren.[17][18][19]

Volcker is an avid fly-fisherman, having recounted, "The greatest strategic error of my adult life was to take my wife to Maine on our honeymoon on a fly-fishing trip."[20][21] Volcker is also known as "Tall Paul" for his height of 6 feet 7 inches (2.01 m),[22][23] standing exactly a foot (30 cm) taller than his wife when they first met.[17]

[edit] References

  1. ^ Obama Announces Economic Advisory Board
  2. ^ "Obama Names Volcker to Head New Economic Panel"], Accessed November 26, 2008.
  3. ^ Treaster, Joseph B. "Paul Volcker: The Making of a Financial Legend", Accessed July 6, 2007. "Donald W. Maloney, another Teaneck High School graduate, entered Princeton along with Volcker. Although they had been in the same homeroom at Teaneck High for several years and had been high achievers, they had not been especially close."
  4. ^
  5. ^ The main philosophical difference between Mr. Volcker, a Democrat, and Mr. Greenspan, a Republican, appears to be in their views on the structure and regulation of the banking system. Robert D. Hershey Jr., "Volcker Out after 8 Years as Federal Reserve Chief; Reagan Chooses Greenspan", New York Times (June 3, 1987)
  6. ^ Paul A. Volcker - Council on Foreign Relations
  7. ^ Shull, Bernard. 2005. The Fourth Branch: The Federal Reserve's Unlikely Rise To Power And Influence. Praeger/Greenwood. ISBN 1567206247. p. 142.
  8. ^ Independent Inquiry Committee into the United Nations Oil-for-Food Programme - Second Interim Report (29 March 2005) p.77
  9. ^ Traub, James. 2006. The Best Intentions: Kofi Annan and the UN in the Era of American Power. Picardor/New York. p. 420.
  10. ^ Calmes, Jackie (2008-01-31). "Volcker Joins List of Obama Backers". Washington Wire (The Wall Street Journal). Retrieved on 2008-07-18. 
  11. ^ The Economic Club of New York: 8 April 2008 Transcript 101st Year, 395th Meeting, (8 April 2008) p.2, and pp.5-8
  12. ^ Kudlow, Lawrence, "Where's Bernanke's Inner Volcker?" (June 27, 2008)
  13. ^ Transcript of Third Presidential Debate, October 15, 2008.
  14. ^ "President-elect Barack Obama establishes President’s Economic Recovery Advisory Board"
  15. ^ "Janice Volcker Is Married". The New York Times (The New York Times Company). 1981-09-20. Retrieved on 2008-07-18. 
  16. ^ "WEDDINGS; Martha DeJong and James Volcker". The New York Times (The New York Times Company). 1993-08-01. Retrieved on 2008-07-18. 
  17. ^ a b Treaster, Joseph B. (2004-04-27). Paul Volcker: The Making of a Financial Legend. New York: John Wiley and Sons. pp. 83, 86, 110. ISBN 0471428124. 
  18. ^ "Paid Notice: Deaths". The New York Times (The New York Times Company). 1998-06-16. Retrieved on 2008-03-26. 
  19. ^ "Speakers Platform Speakers Bureau: Paul Volcker, Keynote Speaker On: Economics, Global Affairs, Finance / Tax". Speakers Platform. Retrieved on 2008-03-25. 
  20. ^ Lyons, Nick (1987-05-03). "GONE OFF FLY-FISHING". The New York Times (The New York Times Company). Retrieved on 2008-03-25. 
  21. ^ Russell, George (1987-06-15). "The New Mr. Dollar". Time Magazine (Time Inc.): p. 4.,9171,964650-4,00.html. Retrieved on 2008-03-19. 
  22. ^ Freeland, Chrystia (2008-04-11). Man in the News: Paul Volcker. Financial Times. Retrieved on 2008-11-27 from
  23. ^ Cuff, Daniel F. (1987-09-03). "BUSINESS PEOPLE; Of Volcker's Laundry And Fiscal Restraint". The New York Times (The New York Times Company). Retrieved on 2008-03-25. 

[edit] Further reading

  • Paul Volcker: The Making of a Financial Legend, Joseph B. Treaster, New York: Wiley, 2004.

[edit] External links

Political offices
Preceded by
Alfred Hayes
President of the Federal Reserve Bank of New York
Succeeded by
Anthony M. Solomon
Preceded by
G. William Miller
Chairman of the Federal Reserve
Succeeded by
Alan Greenspan
Preceded by
Position Created
Chair of the President's Economic
Recovery Advisory Board

Succeeded by
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