Word: volckerism
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...December 1982, the White House set up a task force to draft a plan to overhaul bank regulation. Headed by Vice President George Bush and Regan, the group includes Volcker, FDIC Chairman William Isaac and C.T. Conover, the Comptroller of the Currency. After a year of study, the task force reached a general consensus that the power to examine and regulate banks should be consolidated in a new federal banking agency, with the Office of the Comptroller of the Currency forming its nucleus. Under this proposal, the FDIC would concentrate on insuring bank deposits, while the Federal Reserve would focus...
Before the plan got very far, Volcker torpedoed it. He pointed to the key role that the Federal Reserve has played in dealing with such crises as the Hunt brothers' silver scare in 1980 and the continuing foreign-loan problems of developing nations. Stripping the Reserve Board of its regulatory powers, Volcker contended, would cripple the agency. Said the chairman: "It would indeed be dangerous to look to the Federal Reserve to pick up the pieces in a financial crisis without also providing it with the tools...
Realizing that no reform bill is likely to pass Congress without Volcker's support, the task force worked on a compromise. By last week, the group's staff had fashioned a plan in which the Federal Reserve Board would have control over the 20 biggest...
banks, the five largest banks in each of the Reserve System's twelve regional districts and all state banks. But at a contentious 90-minute task force meeting, Regan, Conover and Isaac argued that Volcker was getting too many concessions, and the session ended in a stalemate. Said a disgusted Bush: "You guys aren't pulling together...
...task force may try again this week to reach an agreement. It seems certain, however, that any compromise will leave Volcker's power largely intact and do little to defuse the rivalries among the top U.S. bank regulators...