Paul Volcker, Obama's Economic Advisory Chair

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Update 11/26, 9:40 AM

As reported here...

Former Federal Reserve Chairman Paul Volcker will chair a new economic advisory panel created by President-elect Barack Obama and designed to stabilize financial markets, the Wall Street Journal reported on Wednesday.

Quoting Democratic officials, the newspaper reported on its Web site that University of Chicago economist and Obama policy adviser Austan Goolsbee will serve as the panel's staff director.

Members of the President's Economic Recovery Advisory Board will come from a cross-section of citizens outside the government, the Journal said.

Read the full story here

The economic panel announcement is the third in three days for President-Elect Obama, who has rolled out his economic team quickly, as promised. Here's a recap of the team so far:

• • • • • • • • • • President-Elect Barack Obama named former Fed Chairman Paul Volcker to lead his new President's Economic Recovery Advisory Board today in his third straight day of economic team announcements.

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::Obama Appoints Berkeley Professor Christina Romer to Chair Council of Economic Advisers
::Obama's Economic Team: Reactions Roundup

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Paul Volcker, former Fed chairman under Carter and Reagan is currently an economic adviser for Obama. As such, his name has been mentioned for treasury secretary.

When he endorsed Obama in January, Volcker said:

"After 30 years in government, serving under five Presidents of both parties and chairing two non-partisan commissions on the Public Service, I have been reluctant to engage in political campaigns. The time has come to overcome that reluctance," Volcker, a Democrat, said in a statement today. "However, it is not the current turmoil in markets or the economic uncertainties that have impelled my decision. Rather, it is the breadth and depth of challenges that face our nation at home and abroad. Those challenges demand a new leadership and a fresh approach."

Of Volcker for the Treasury, the New York Times had this to say:

[Volcker] has a deep understanding of the problems and would not need a steep learning curve. Indeed, I believe that the new president should name his Treasury secretary the day after the election, and have him and a small staff move into Treasury and immediately begin grappling with the issues alongside Henry M. Paulson Jr., the current Treasury secretary. In a recent interview with Larry Kudlow on CNBC, Mr. Paulson essentially promised that kind of cooperative transition. It is a pretty important thing to do.

Secondly, during his time at the Fed, Mr. Volcker showed that he was willing to do difficult -- even unpalatable -- things. He also showed he was unafraid to inflict pain on the very president who appointed him -- in his case Jimmy Carter. As you may recall, in his effort to stop the raging inflation that was threatening the country, Mr. Volcker raised interest rates so high that he threw the country into a recession -- and in so doing, doomed Mr. Carter's re-election efforts. He faced stiff criticism, but he held his ground, and in the end, he did the right thing for the country. The long bull market that began in 1982 was a direct result of Mr. Volcker's willingness to do what he thought was right.

Finally, in a time of such deep partisanship, Mr. Volcker would instantly command the respect of Democrats and Republicans alike. Although politicians will certainly questions his decisions -- that is what makes the world go round -- they will not question them on the basis of partisanship. That is important. And they certainly will not accuse Mr. Volcker of doing Wall Street's bidding at the expense of Main Street, as many Republicans now accuse the current Treasury secretary of doing. As R. Glenn Hubbard, the former head of the Council of Economic Advisers under President Bush, told me the other day, "I can't think of anyone else with the same stature."

Comments

[whatisgoingonblog]

With his proven track record as the Fed chairman in the 80's I think volcker is an great choice for the advisory committee. Oil shocks were calmed and our current economic crisis looks to be calmed with Volcker's experience and knowledge.

[newmexicogold]

"He faced stiff criticism, but he held his ground, and in the end, he did the right thing for the country. The long bull market that began in 1982 was a direct result of Mr. Volcker's willingness to do what he thought was right."

And the Reagoni Army still wants to take credit for that period of prosperity. This is exactly the character required in the person leading the critical office to revive out economy!!

[Girlscout63]

Thre prosperity came from cutting the large tax burden . NOt the fed. Many people could not afford to buy homes with the high interest that Paul put in place. But the Fat CAts who had cash could earn high interest over 10%,,,

[thebeerdoctor]

I am not knowledgeable enough to say whether Paul Volcker would be a wise choice or not. But looking at his biographical history, it is obvious he has been at the center of this universe before.

[Purcy]

I have confidence in Barack Obama's ability to pick the right people for the positions he'll be filling. I can't wait to see who the choices are but I hope it's possible to fill them with a representation of people regardless of race, sex, or religious preference.

I am still so extremely happy over Obama's election that I can't think of much beyond that. I am happy at seeing the joy of so many African Americans and what this election means to them. I also want to contemplate what this election means to those of us who are not of African American descent. Let's hope this is the beginning of the end of the racism still existing in this country. I just want to enjoy it for a while before I look further to the future. Life is good. Obama is smart, so is his wife and his children are wonderful! It is a proud time for America. It's wonderful to see and hear the responses of those individuals who live in other countries! Obama will be a great president!

[Kache]

I strongly agree with the above sentiment. Mr Volker is one of the most courageous public servants of our time.

He not only neutered the self-feeding inflation spiral of the late-Carter -- early-Regan years with his artificial recession, he broke OPEC in the process. The recession was so sharp that oil consumption dropped dramatically causing a sudden glut in world oil supplies. OPEC prices fell from today's equivalent of $100bl to $25 in 3 months - and remained at that basic level for 15 years. Exxon lost $6b in the next quarter as they worked through futures contracts (the biggest quarterly loss by a company in history). No one, business or government, supported Volker, just his Board of Governors. As it turned out, he was the adult in the room.

We need just his kind of leadership again. But, that said - Mr. Volker has today's starure only because his recipe was correct back then. If he had been wrong he would be a Wal-Mart greeter today. I trust that President Obama will nominate the person who has the correct recipe for today's problem instead of just someone with stature. I truely hope that person is indeed Mr Volker!!!