Thursday, December 10, 2009

Volker Lays the Wood to the Bankers

I loved this article. Paul Volker spoke to a conference of bankers the other day ...
As bankers demanded that new regulation should not stifle innovation, a clearly irritated Mr Volcker said that the biggest innovation in the industry over the past 20 years had been the cash machine. He went on to attack the rise of complex products such as credit default swaps (CDS).

“I wish someone would give me one shred of neutral evidence that financial innovation has led to economic growth — one shred of evidence,” said Mr Volcker, who ran the Fed from 1979 to 1987 and is now chairman of President Obama’s Economic Recovery Advisory Board.
Of course, the same could be said for massive deficits and stimulus packages. It's almost like living within your means and simple loans made with basic return-on-investment caluclations are the best ways to economic growth.

Heresy!

1 comment:

Dean said...

I remember seeing Volker back in the 80s when I was in high school with that scowl on his face and chomping on that fat cigar and thinking, man, if I have to grow old, I wanna be like that dude.