Word: volckerism
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...Federal Reserve began charging major banks a three-point interest-rate surcharge on funds they borrowed from it; that levy was eliminated last week. There were also strong expectations that Washington might be preparing to discard the rest of the credit curbs initiated two months ago. Fed Chairman Paul Volcker had been opposed to the measures, which included reserve requirements on new credit-card borrowings and on money-market funds. Observers expected that Volcker would use the first available opportunity, like the recession, to get rid of the limitations...
...nation's central bank denies that it is changing its policy course. It insists that the unprecedented free fall in interest rates is the predictable result of its success in getting a better grip on the money supply. Last fall, when Volcker switched tactics in the attack on inflation and decided to concentrate on controlling the growth of the money supply rather than the level of interest rates, he warned that the rates would rise sharply but then also fall rapidly. With less money available to meet loan demand, rates at first rise. But when credit demand falls...
...Raton, Fla., to plead for help in meeting their debts. The brothers supposedly told leading bankers that they probably owed about $1.7 billion. Over cups of coffee and cold cheese sandwiches, the moneymen debated long into the night whether to give the Hunts a loan. Federal Reserve Chairman Paul Volcker made an appearance wearing a shirt over his pajama top and kept an eye on the proceedings. But finally the Hunts were told...
...Though Volcker testified last week that he neither initiated nor guided the negotiations for any loans to the Hunts, his continual monitoring of the situation was interpreted by bankers to mean that the Federal Reserve, despite its credit restraint policy, favored some kind of bailout to keep the Hunts from going under...
Some of the sharpest criticism during last week's hearings was directed not at the Hunts but at Chairman Volcker. What was the man who was supposedly stopping speculation doing in a rescue operation to save the Hunts? Rhode Island Congressman Fernand St Germain complained that the Federal Reserve's role in the wings of the Hunts' search for bailout loans showed that when big speculators lose millions, "telephone calls come to Paul Volcker for a quick fix." This week St Germain and Senator William Proxmire plan to introduce new tough legislation that will change the rules...