Paul Volcker on banking and finance

Paul Volcker on Greedy Bankers, the Ryan Plan, and the Fed
Newsweek/The Daily Beast
September 17, 2012
Interview with: Paul Volcker, Belfer Center International Council member
Topic: Banking and finance

Gelb: Are the troubles in banking and finance—the illegal trading, the possibly illegal LIBOR-rate setting, the sky-high risk taking, the supposed difficulties bank heads have being able to control their subordinates—really something new?

Volcker: I believe it is something new in degree. I say that with some reluctance, thinking maybe it’s just that I’m an old man and didn’t know what was going on before. But I am struck by the number of not just friends but other observers who share the belief that there has been a real change in the mental approach of people in markets. They used to be more customer-oriented, with some sense of fiduciary responsibility that’s been very much reduced into an impersonal, ‘you’re a counterparty, you’re not a customer’ caveat emptor.

That attitude lies behind a lot of these difficulties and has been spurred by enormous changes in compensation practices that have tempted people to cut corners. I’m afraid that the temptation now becomes greater—that if I can, as they say, cut some corners, maybe I’ll get some of this magic dust myself in proportions that seemed unimaginable a few years ago.”

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Volcker and William L. Silber, author of Volcker: The Triumph of Persistence were also interviewed by CBS This Morning on September 15, 2012.

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