Speaking at a financial markets conference at Vanderbilt University in Nashville, TN, former Federal Reserve Chairman Paul Volcker on Saturday warned that the U.S. faces a “long slog” toward recovery.
From Reuters: The United States may not be in a Great Depression but it is “in a great recession for sure,” following the economy’s unprecedented tumble in late 2008, Volcker said.
The former chairman also said that the Fed’s recent interventions into credit markets will inevitably lead to a review of the Federal Reserve Act:
“For better or worse, we are at a point where the Federal Reserve Act is going to be reviewed,” said Volcker. The wide range of proposals, from giving the Fed much more supervisory authority to stripping it of part of its current authorities, “are just an indication of how wide open that question is going to be.”
Mr. Volcker, who is credited with breaking the back of inflation in the 1980s, urged patience against a rush by Congress in addressing financial regulation. “The temptation is to act quickly, but we have to act comprehensively,” he said.
Mr. Volcker addressed also the “too big to fail” subject:
“I don’t want to get to the point where some hedge funds or equity funds are getting very large and then getting into trouble to the point they need government protection,” he said.
In his comments Volcker emphsized his preference in seeing the financial system eventually revert back to being centered on commercial banks.