Crisis Leads Some to Seek Volcker’s Return

Nervous investors, newspaper columnists and even a Democratic presidential aspirant are calling for the return of Paul A. Volcker to government, saying that the former Federal Reserve Board Chairman is needed to tame the current economic crisis.

Volcker, who left office last June after almost eight years as the United States’ independent and tough chief central banker, has still not committed himself to a new career, although some friends think that he might welcome a return to public life.

Universities and financial houses are vying for his attention. He commands fees of $10,000 or more for speeches.

“He has been offered all sorts of jobs. There are brokerage and bond houses that would love to have him on staff. The last time I talked to him he said he had a long list,” said William Neikirk, Volcker’s biographer and a journalist at the Chicago Tribune.

He added: “But he has been indecisive and that makes me wonder if he would like to be back in public service. I don’t think he wants to run a bank. Making a lot of money never seemed to appeal to him.

“I am positive he would love this (economic) situation. It is tailor-made for him. He is a crisis manager. He would love to have President Reagan call him now and say ‘Be my crisis manager.’ He thrives on crisis,” Neikirk said.

Democratic presidential aspirant Richard Gephardt wants to see the towering, cigar-puffing Volcker return to government to coordinate economic policy for three months to reassure battered financial markets.

“It would be an extraordinary step, but these are extraordinary times,” he said.

A letter writer to London’s Financial Times likened the return of Volcker to having as “dramatic an impact on Wall Street as Winston Churchill’s return to the British Admiralty had on the Royal Navy in September, 1939.” Many U.S. newspaper columnists and editorial writers have echoed this opinion.

Controversy surrounds Volcker’s decision not to serve a third four-year term as Fed chairman. The White House said it would have reappointed him had he asked, and friends say he was willing to serve again had he been asked.

To some, it appeared that the White House decision not to ask him to return was deliberate.

There is also a debate beginning on whether Volcker’s policies, often at odds with the White House, were responsible for creating the U.S. trade imbalance and federal budget deficits that fed the stock market crash on Oct. 19 and raised fears of a worldwide recession.

Volcker tamed the raging inflation that engulfed the U.S. economy from the late 1970s to the early 1980s by ordering a credit squeeze and raising interest rates.

One result was a major recession that helped drive Jimmy Carter from office. Volcker’s supporters say the recession would have been even more severe without the Fed’s actions.

Another result was a strong dollar, which helped create the massive U.S. trade imbalance.