In Memoriam: Paul A. Volcker

Our friend and counselor, Paul A. Volcker, passed away this week at age 92. Most recall him as the determined Chairman of the Federal Reserve Board who broke the back of inflation in the late 1970s and early 1980s. Paul was an archetype of an older kind of leader – taciturn, blunt, insightful, always probing for the underlying facts and the truth of things and events. He was an idealist without starry eyes, that rugged kind of American mind which never lost sight of aspirations but, wisely, always grounded his hopes and dreams in reality.

I would visit him in his New York office from time to time to get his advice and thoughts on financial capitalism. I always left our conversations the wiser for his observations and admonitions.

He brought me up short one time. I walked in and he was slouched back in his chair behind his desk. As I was sitting down across from him, he looked me coldly in the eye and asked with a grim expression: “Steve, are you preparing the funeral of the United States yet?”

I was stunned. I had come to him for answers to my country’s problems only to find him not sanguine at all about America’s future.

I responded: “Mr. Volcker, I don’t do funerals.”

He smiled and said “Good.” And we started talking about strategic options to get more constructive outcomes from Wall Street.

Paul established the Volcker Alliance to bring together experienced and practical minds to improve two important infrastructures – public service and financial services. He had sensed that the aggrandizement of our bureaucratic state had abandoned a culture of true public service and had become too dependent on rational expertise and too absorbed with technicalities and self-righteous pedantry. Government had cut itself off from the people it was hired to serve. He wanted moral reform in schools of public administration.

He believed that Wall Street had crossed some Rubicon to inject too much speculation into financial markets. Such financialization serves financiers and those with liquidity much more than it does the real economy and middle class. Had his instincts been followed, the world would have avoided the 2008 collapse of credit markets.

I will personally miss Paul Volcker and I fear that all of us will have a harder time of it without his moral courage and wisdom pointing us in the right direction.