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Remembering Paul Volcker

December 10, 2019, 10:08 AM UTC

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Good morning.

Paul Volcker, the chairman of the Federal Reserve Board who tamed double-digit inflation in the 1980s, died Sunday at the age of 92.

As a cub reporter in the 1980s, I was assigned to follow Chairman Volcker when he appeared in public, and try, with little success, to get him to say something newsworthy. Once, when the dollar was soaring in the mid-1980s and rumors were rampant that the Fed had intervened in foreign exchange markets, I joined a scrum of reporters that chased him through the halls of Congress to his waiting limousine, shouting: “Did the Fed intervene?” The towering man ignored us until he got to his car, then turned and said: “We did what we did, we didn’t do what we didn’t do, and the result was what happened.” Transparency was not one of his values.

Much later, after the recession in 2009, I invited Volcker to speak at a Future of Finance conference held by the Wall Street Journal just south of London. Most of the financiers there were expressing fears that a wave of regulation in the wake of the recession would dampen financial innovation. By the end of the day, Volcker had had his fill. “Wake up gentleman, your response is inadequate!” Volcker told the bankers, adding “I can’t think of any socially valuable financial innovation since the ATM machine.”

In this age of populism, Volcker’s critical legacy is a reminder that popular democracy has its limits, and that leaders are expected to lead, not just blindly follow public opinion. Volcker led the fight against inflation in the face of immense popular protest, from both the left and the right. Interest rates soared because of his policies. But he held firm. And the folks in the White House—across two different administrations, one Democratic and one Republican—let him do his business.

In later years, Volcker became a powerful symbol of the fight against global corruption. And to the end, he worked to bring more qualified people into public service. He wanted his legacy to be raising the quality of those entering government. In today’s parlance, he believed passionately in the importance of the “deep state.”

Great men are always easier to identify in retrospect than in real time. But Volcker’s greatness always was unmistakable. He saved the global economy, in the face of immeasurable opposition. And for that, he deserves our deepest gratitude.

More news below.

Alan Murray


Impeachment Time

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NortonLifeLock Sale

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Morgan Stanley

French financial regulators have fined Morgan Stanley $22 million for market manipulation. Morgan Stanley denied the charge, which related to the use of "pump and dump" tactics to manipulate French and Belgian bond prices in mid-2015, at the height of the Greek debt crisis. Bloomberg

SoftBank Bets

SoftBank is bailing out of its investment in dog-walking startup Wag, by selling its stake back to the firm. Although the amount involved is unclear, it is reportedly less than SoftBank paid a couple years back, making this a new addition to a growing list of bad bets (see also: Uber and WeWork) for SoftBank's $100 billion Vision Fund. CNBC


WTO Role

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Fossil Fuels

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FBI Actions

The Justice Department's inspector general has contradicted conspiracy theories around the FBI's investigation of then-candidate Donald Trump in 2016. Michael Horowitz's long-awaited report, delivered yesterday, confirmed that the FBI had an "authorized purpose" when it began probing the Trump campaign's alleged ties to Russian election interference. The report also revealed a friendship between Ivanka Trump and former British intelligence officer Christopher Steele, author of the notorious memos about Trump in Russia, and highlighted FBI errors when applying to spy on campaign aide Carter Page. Fortune

Deutsche Bank

Deutsche Bank is to scrap the separate legal entity that runs its, well, Deutsche banks. The firm hopes the merging of its German retail banking operation into the group structure will save it €100 million a year. Why is that part of its business being run by a separate entity anyway? It's a hangover from when Deutsche Bank, two decades ago, was considering getting out of retail banking. Financial Times

This edition of CEO Daily was edited by David Meyer.