Paul Volcker, arguably the best central banker in U.S. history, was interviewed in April by Karen Christensen of Rotman Magazine, the public-issues and alumni journal of U of T's Rotman School of Management. The interview with the former Federal Reserve Board chairman appears in the current, Fall 2009, edition of the magazine.
Volcker was one of the earliest economic advisers to sign up with the Obama campaign, and remains on the U.S. president's economic team. Volcker's wary regard for bankers and the need for keeping a sharper eye on them stand up well in the current debate in Congress on much-needed regulatory reforms:
"Major banks should be more tightly controlled and less able to make the sort of risky bets that led to the current debacle. There should also be more oversight of some kind for hedge funds, equity funds and the remaining investment banks. People argue that this will stifle innovation. But 'innovations' like asset-backed securities and credit-default swaps have brought few benefits. Most would agree that this 'bright new financial system' has failed the test of the marketplace. Let's face it, the most important innovation in banking for most people in the last 20 years is the automatic teller machine."
Bagehot said it best: "If bankers are busy, there is something wrong."
Rotman Magazine is subscription only.
Addendum (Oct. 21)
* Felix Salmon (Reuters): The importance of Volcker.