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Mr. Volcker, brought on board to great fanfare, turns out to be the Trophy Wife of the Obama economic team.  He gets trotted out whenever the President needs to show off, but clearly, Mr. Volcker is to be seen and not heard.

The former Fed Chairman appears to be the only member of the current economic team who Gets It – and the only one that no one is listening to.

Financial professionals are notoriously light on their grasp of the history of their own industry.  Those who shape the industry itself are often the promulgators of the fallacy that This Time It Will Be Different.  With leadership like this, can we expect the investing public to have a clue?

Volcker, a man who very much lived through the financial and political turbulence of dealing with the near destruction of the US economy, keeps repeating over and over, like a quietly inebriated man during a noisy cocktail party, “Bring back Glass Steagall. Bring back Glass Steagall.”  The other partygoers look at him, deem him not danger to himself or others, and step around him as they head back to the punchbowl for a refill. 

Volcker is anything but inebriated.  He sees clearly just how badly all this is likely to end.  But he has been the Daniel in the lions’ den of politics and has no illusions about his own power to remove the liquor.

“Mr. Volcker scoffs at the reports that he is losing clout,” reports the New York Times (20 October, “Volcker Fails To Sell A Bank Strategy”).  Asked about being sidelined in the current debate, Volcker responded, “I did not have influence to start with.”

Stay tuned for the next episode of the new reality show, “Desperate Fed Chairmen.”

Moshe Silver

Chief Compliance Officer