December 9, 2019 / 3:46 PM / 2 months ago

Factbox: Volcker quotes on U.S. banks, inflation, government

WASHINGTON (Reuters) - Paul Volcker, the towering former Federal Reserve chairman who tamed U.S. inflation in the 1980s and decades later inspired tough Wall Street reforms in the wake of the global financial crisis, died on Monday at the age of 92.

FILE PHOTO: Former U.S. Federal Reserve Chairman Paul Volcker (L) answers a question from Bretton Woods Committee International Council Chairman Richard Debs (R) during the Bretton Woods Committee annual meeting at World Bank headquarters in Washington May 21, 2014. REUTERS/Jonathan Ernst

Here are some of his quotes over the years:

ON MEETING WITH BANKS RESISTING REFORMS FOLLOWING THE 2008 FINANCIAL CRISIS

“Wake up, gentlemen. I can only say that your response is inadequate. I wish that somebody would give me some shred of neutral evidence about the relationship between financial innovation recently and the growth of the economy, just one shred of information.” (Wall Street Journal interview, 2009)

ON REGULATORS REIGNING IN SPECULATIVE TRADING BY BANKS

“If you want to be a bank, follow the bank rules. If Goldman Sachs and the others want to do proprietary trading, then they shouldn’t be banks.” (Reuters interview, 2011)

ON CHANGES TO THE VOLCKER RULE, WHICH BEARS HIS NAME:

“What’s critical, of course, is that any change protect the core principle: ‘Thou shalt not gamble with the public’s money.’” (“Keeping At It: The Quest for Sound Money and Good Government,” by Paul Volcker and Christine Harper, 2018)

ON FED’S 2% INFLATION TARGET:

“A remarkable consensus has developed among modern central bankers ... that there’s a new ‘red line’ for policy: a 2 percent rate of increase in some carefully designed consumer price index is acceptable, even desirable, and at the same time provides a limit. I puzzle at the rationale. A 2 percent target, or limit, was not in my textbooks year ago. I know of no theoretical justification.” (“Keeping At It: The Quest for Sound Money and Good Government,” by Paul Volcker and Christine Harper, 2018)

ON INFLATION’S EFFECTS

“Inflation is thought of as a cruel, and maybe the cruelest, tax because it hits in a many-sectored way, in an unplanned way, and it hits the people on a fixed income hardest. And there’s quite a lot of evidence, contrary to some earlier thinking, that it hits poorer people more than richer people, who have more maneuverability, more way to protect themselves - who own their houses, for instance.” (PBS interview)

ON RISING DISTRUST OF GOVERNMENT

“The central issue is we’re developing into a plutocracy. We’ve got an enormous number of enormously rich people that have convinced themselves that they’re rich because they’re smart and constructive. And they don’t like government and they don’t like to pay taxes.” (New York Times interview, 2018)

ON PRESIDENT DONALD TRUMP’S TRADE POLICIES

“It sounds terrible but I respond more favorably to what the president of China is saying than the president of the United States,’” Volcker said. “The president of China, at least, says he’s looking forward to a harmonious relationship over time ... But looking for peaceable outcomes, where we are all threats and demands, so it’s a different story being told” (Reuters interview, 2019)

ON RESPECT FOR INSTITUTIONS

“Respect for government, respect for the Supreme Court, respect for the president, it’s all gone. Even respect for the Federal Reserve. And it’s really bad. At least the military still has all the respect. But I don’t know, how can you run a democracy when nobody believes in the leadership of the country?” (New York Times interview, 2018)

ON CAREER PATHS

“My grandson said, ‘I want to be a financial engineer.’ My heart sank. Here is a whole profession that grows up and 85 percent of what they do is how to get around the rules.” (Reuters interview, 2003)

Reporting by Lindsay Dunsmuir; Editing by Nick Zieminski

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