Former Fed chief Paul Volcker dies, aged 92

Washington

PAUL Volcker, the towering former Federal Reserve chairman who tamed US inflation in the 1980s and decades later inspired tough Wall Street reforms in the wake of the global financial crisis, died on Monday at the age of 92, according to the New York Times, which quoted his daughter.

Mr Volcker, who media reports said had been suffering from prostate cancer, was the first to bring celebrity status to the job of US central banker, serving as chairman of the Federal Reserve from 1979 to 1987. As with the man who succeeded him, Alan Greenspan, Mr Volcker could soothe or excite financial markets with just a vague murmur.

In 2018, he published a memoir, Keeping At It: The Quest for Sound Money And Good Government, and expressed concern about the direction of the federal government and the loss of respect for it.

"The central issue is we're developing into a plutocracy," he told the New York Times in October 2018. "We've got an enormous number of enormously rich people that have convinced themselves that they're rich because they're smart and constructive. And they don't like government and they don't like to pay taxes."

In 2009, Mr Volcker began serving as a key financial adviser to President Barack Obama and faced a maelstrom of financial turmoil, government bailouts and fallout from the deepest recession since the 1930s Great Depression.

In working to help the US economy recover from the 2008 crisis, he proposed what became known as the Volcker rule that restricted banks from making high-risk investments with depositors' cash. Since Donald Trump, who favours fewer regulations, became president in 2017, the rule has been under review.

Standing over 2 metres tall, Mr Volcker smoked cheap cigars, wore old suits and spoke with a rumbling baritone, creating a mystique that intimidated congressmen and even presidents. Part of his aura of power was due to the Fed's unusual nature - the central bank's governors, although appointed by the president and overseen by Congress, are effectively answerable to no one.

In 2018 when President Trump regularly attacked the Fed as "crazy" for raising interest rates, Mr Volcker advised Chairman Jerome Powell to simply ignore the criticism.

Beginning in his years at the Fed, when he railed against the huge US trade and budget deficits and battled inflation at every opportunity, investors idolised the man. Since publishing his book in 2018, Mr Volcker has even criticised the Fed's overly precise devotion to a 2-per cent inflation target.

Born on Sept 5, 1927, in Cape May, New Jersey, Mr Volcker was educated at Princeton, Harvard and the London School of Economics. He was an undersecretary at the Treasury Department during the Nixon administration and president of the Federal Reserve of New York before taking over the Fed chairmanship.

His wife of 44 years, Barbara, died in 1998 after many years of suffering from rheumatoid arthritis. They had two children. REUTERS