Volcker brought instant credibility to President Barack Obama's 2008 presidential campaign. His weighty experience helped dispel the notion that Obama lacked the economic credentials to become chief executive during the worst economic crisis since the Great Depression. While he is not taking a full-time job in the administration, as chairman of an economic advisory committee, he will be a critical voice as Obama tries to forge a path out of the recession.
Volcker left the committee in January 2011 and was replaced by GE Chairman Jeffrey Immelt.
In a pivotal moment in the final 2008 presidential debate, Sen. John McCain (R-Ariz.) questioned the associates of the junior senator from Illinois, a persistent campaign theme. "'Let me tell you who I associate with,' Obama told McCain. 'On economic policy, I associate with Warren Buffett and former Fed chairman Paul Volcker.'"
Volcker has a reputation for fairness and strong leadership during troubled times. When he became chairman of the Federal Reserve in 1979, he faced the worst inflationary crisis America had seen in decades. He ended it by raising interest rates sharply, sparking the deepest downturn since the Great Depression. The interest-rate hikes are now widely viewed as a necessary step to end the cycle of soaring prices and stagflation that set in, but at the time the tactic was deeply controversial, as the unemployment rate climbed above 10 percent.
Since being replaced by Alan Greenspan in 1987, Volcker has become an eminence grise, lending independent credibility to a range of organizations. For example, he investigated alleged corruption in the United Nations Oil for Food Program in Iraq. He is also chairman of the Group of 30, an assemblage of leading financial experts that seeks an overhaul of global financial regulations.
In his later years, he's still helping to shape the nation's future economic policies, and was even discussed as an Obama Treasury secretary. Though he has taken an advisery position rather than a full-time job, "When the team discusses the financial crisis, 'The most important question to Obama: What does Paul Volcker think?' says Jason Furman, the 2008 campaign's economic-policy director."
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