• 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 Monday at the age of 92, according to his daughter, Janice Zima.

Volcker, who Zima said had been suffering from prostate cancer, was the first to bring celebrity status to the job of U.S. central banker, serving as chairman of the Federal Reserve from 1979 to 1987. As with the man who succeeded him, Alan Greenspan, Volcker could soothe or excite financial markets with just a vague murmur.

In 2018, he published a memoir, “Keeping at It: The Quest for Sound Money and Good Government,” and expressed concern about the direction of the federal government and the loss of respect for it.

“The central issue is we’re developing into a plutocracy,” he told The New York Times in October 2018. “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.”

In 2009, Volcker began serving as a key financial adviser to President Barack Obama and faced a maelstrom of financial turmoil, government bailouts and fallout from the deepest recession since the 1930s Great Depression.

In working to help the U.S. economy recover from the 2008 crisis, he proposed what became known as the Volcker rule that restricted banks from making high-risk investments with depositors’ cash. Since Donald Trump, who favors fewer regulations, became president in 2017, the rule has been under review.

Volcker stood 6-foot-8 (2 meters), smoked cheap cigars, wore old suits and spoke with a rumbling baritone, creating a mystique that intimidated congressmen and even presidents. Part of his aura was due to the Fed’s unusual nature — the central bank’s governors, although appointed by the president and overseen by Congress, are effectively answerable to no one.

In 2018, when Trump regularly attacked the Fed as “crazy” for raising interest rates, Volcker advised Chairman Jerome Powell to simply ignore the criticism.

Powell, in a statement, said he was “deeply saddened” by Volcker’s death, and that his work had left “a lasting legacy” for the country. Economists would largely agree that included not just taming inflation but restoring the Fed’s standing as an institution that reacted to economic facts, not political pressure.

Volcker was willing to slam the economy’s brakes like no other Fed chair, and absorbed his share of barbs from lawmakers in the 1980s. But he faced down both that criticism and, ultimately, inflation that had spiked higher than any point since the 1940s.

“Without Paul Volcker’s toughness and guts, we may never have broken the grip of rising inflation and declining productivity that plagued the United States during the 1970s,” former SEC Chairman Arthur Levitt wrote in the foreword of a Joseph Treaster’s 2004 biography, “Paul Volcker: The Making of a Financial Legend.”

Many have credited that effort for setting the stage for steady economic growth and a long bull market that since the early 1990s brought prosperity to millions of Americans. Yet critics say he also pushed the United States into an unnecessarily severe recession in 1981-1982.

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