Additional Obama Appointments
Paul Volcker - Chairman, new Economic Recovery Advisory Board
Former Chairman, Board of Governors of the Federal Reserve System
Federal experience dating back to Kennedy administration
Nominated: November 26, 2008
Obama’s comments:
“I’m pleased to announce that (the new Economic Recovery Advisory) Board will be chaired by one of the world’s foremost economic policy experts, a former Chairman of the Federal Reserve, and one of my most trusted advisors, Paul Volcker.
“Paul has been by my side throughout this campaign, providing a deep understanding of financial markets, extensive experience managing economic crises, and keen insight into the global nature of this particular crisis. Paul has served under both Republicans and Democrats and is held in the highest esteem for his sound and independent judgment. He has a long and distinguished record of service to our nation, and I am pleased that he has answered the call to serve once again.”
Others’ comments:
“Paul Volcker, a former Fed chairman who endorsed Senator Obama (in early 2008), (has given) a resounding critique of the Fed, deriding its decisions to bail out Bear Stearns and to allow the dollar’s steep depreciation. His decision to enter the fray couldn’t (have) come at a better time for Mr. Obama, who (would) benefit from having such a well-known economic figure backing his campaign during a period of economic slowdown.
“‘Obama needs Volcker,’ the political consultant Hank Sheinkopf said. ‘There is only one Volcker.’
“As another former Fed chairman, Alan Greenspan, (was) derided by critics who argue his policy of keeping interest rates low has led to the current market slowdown, Mr. Volcker (became) more important than ever as a heavyweight persona in the universe of central bankers. ‘Paul Volcker is the last god of central banking left standing,’ the director of international economics at the Council on Foreign Relations, Benn Steil, said. ‘He has an impeachable reputation.’
“Best known for breaking the back of inflation by raising interest rates to 21% when he was Fed chairman, Mr. Volcker is a proponent of a strong dollar—he even supported a fixed-exchange rate, whereby the dollar would be fixed against other currencies so as to prevent a steep slide in its value. In a speech at the Economics Club of New York (in 2008), he criticized the weakness of the greenback, and took issue with the Fed for orchestrating JPMorgan Chase & Co.’s acquisition of Bear Stearns.
“‘Out of perceived necessity, sweeping powers have been exercised in a manner that is neither natural nor comfortable for a central bank,’ he said.
“Mr. Volcker also said the current environment is reminiscent of the 1970s, when, as (in 2008), there were rapidly rising commodity prices and a devaluing of the dollar. At the time, Mr. Volcker instituted a series of interest rate hikes to curb inflation.
“‘This is a perfect time for Volcker; he is courageous and arrogant, but he knows what to do,’ an economist at Carnegie Mellon and a historian of Fed policy, Allan Meltzer, said.
“Although Mr. Volcker is well-respected, not everyone sees him as a savior who curbed runaway inflation: ‘There is a minority school of thought that doesn’t attribute the end of inflation to Mr. Volcker,’ the president of H.C. Wainwright & Co. Economics, David Ranson, said. Instead, they say his policy of raising interest rates so dramatically did little more than create the most severe depression since the 1930s. ‘I don’t think we should look to Volcker to bring inflation under control,’ Mr. Ranson said.
“This is not the view of many experts, however.”
—The New York Sun
Assumed Office: February 6, 2009
Appointment Impact:
Obama: “This Board is modeled on the President’s Foreign Intelligence Advisory Board created by President Eisenhower to provide rigorous analysis and vigorous oversight of our intelligence community by individuals outside of government—individuals who would be candid and unsparing in their assessment. This new board will perform a similar function for my Administration as we formulate our economic policy.
“The Board will be composed of distinguished individuals from diverse backgrounds outside of government—from business, labor, academia and other areas—who will bring to bear their wisdom and expertise on the formulation, implementation and evaluation of my Administration’s economic recovery plan. The Board will report regularly to me, Vice President-Elect Biden and our economic team as we seek to jump-start economic growth, create jobs, raise wages, address our housing crisis and stabilize our financial markets.
“The reality is that sometimes policymaking in Washington can become too insular. The walls of the echo chamber can sometimes keep out fresh voices and new ways of thinking—and those who serve in Washington don’t always have a ground-level sense of which programs and policies are working for people, and which aren’t. This board will provide that perspective to me and my Administration, with an infusion of ideas from across the country and from all sectors of our economy—input that will be informed by members’ first-hand observations of how our efforts are impacting the daily lives of our families.”
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