This former Fed chairman gets all Dungeons & Dragons on those who he says caused the crisis.
Guardian: Paul Volcker, the central banker responsible for crushing inflation in the United States in the 1980s, blamed excessive pay packages yesterday for leaving the world with a “broken financial system”.
Speaking in London, the former chairman of the Federal Reserve, who some have tipped for a key role in Barack Obama‘s new administration, said there had been “tremendous rewards and payments of magnitude for presumed success and not much penalty for failure”.
Volcker said the other main culprit for the current crisis was financial engineering, with securitised loans, credit default swaps and other derivative products trumpeted as a way of minimising and distributing risk. “In fact, the managers of organisations didn’t know what they were doing and were not in control. They were trying to turn dross into gold. We had a lot of alchemists out there.”
In the aftermath of Obama’s victory a fortnight ago, it was rumoured in Washington that he might turn to the 81-year-old Volcker to be his treasury secretary. More recently, there has been speculation that he will head an inquiry into causes of the credit crunch and possible cures. He declined to comment on the speculation.
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