But Volcker’s persistence is paying off now.
An early and important supporter of Obama’s presidential campaign, Volcker was nevertheless passed over for key posts in the administration. The former Federal Reserve chief’s criticism of financial deregulation appeared to have limited influence on policymakers either in the White House or on Capitol Hill. Rather than breaking up banks or limiting what they could do, they tinkered with capital requirements and proposed a tax intended to recoup the cost of the Troubled Asset Relief Program.
Volcker, 82, might have been valued as much for window dressing as for his policy views, given that he is perceived as standing more apart from Wall Street than administration officials such as Treasury Secretary Timothy Geithner and Lawrence Summers, chief of the National Economic Council.
But Volcker kept plugging away, gradually lining up support. There he was, criticizing a proposal to give bank regulators the authority to block accounting standards in November, railing against the dangers of financial innovations at a conference in the U.K. last month and telling business leaders that banks which blend high-risk trading with traditional consumer lending face "unmanageable conflicts of interest" and should be broken up.
True, it may have been the Democrat’s loss of a senate election in Massachusetts, which cost the party its super-majority, that prompted the administration to get tougher on big banks. Wall Street’s rapid return to profitability didn’t hurt either, as the Economist points out.
But that’s how things get done in Washington. Many of the big policy ideas floating around aren’t new. You just have to keep making your case, waiting for the right moment.
BankThink is a collective byline used by American Banker editors to make observations and weigh in on big ideas shaping the industry.
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