Spotlight on: Paul Volcker, former chairman, Federal Reserve

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The Independent Online

He of Volcker Rule fame?

Fame? You mean infamy. Not a day goes by without someone piling on to criticise the Volcker Rule, which bans US banks from "proprietary trading", that is, speculating with their own money.

Why is he a fan?

Now aged 84, Volcker cultivates the too-old-to-care air of a man telling time-worn truths to smart-asses half his age. He championed the ban on prop trading as by far the simplest way to cut banks down to size and cut the risk of them going belly up.

What do the critics say?

That in practice it is impossible to define prop trading precisely. Mr Volcker just shrugged at that one. "It's like pornography," he said. "You know it when you see it".

So is the rule going to get implemented?

By July, though the details are still in flux. Regulators are trying to pin down definitions now, and there was a deadline for public comments yesterday. Banks and their lobbyists have thrown in multiple objections, and so have foreign governments, the UK included. They fear it will create a less liquid market for government debt, raising borrowing costs.

How is Mr Volcker taking the criticism?

Water off a duck's back, you would have thought, for the man who used sky-high interest rates to quell inflation when he ran the Fed in the Eighties, despite howls from the public.

Water off a duck's back, except...

Except that he has had enough of all the carping and penned a public letter attacking the critics. They are missing the huge benefits of the rule: an end to conflicts of interest at banks, and getting bankers back focused on their clients, instead of on big bets that they hope will net them a big bonus.

So he has come out swinging?

Yes. It is, after all, about his legacy.