White House adviser and former Fed chairman Paul Volcker says it’s too soon for U.S. policymakers to withdraw the stimulus measures and interest-rate cuts used to fight the worst slump since the Great Depression.
“This is not the time to take aggressive tightening action, either fiscally or monetary-wise,” he said, pointing to “high” unemployment.
“So I think we have to, as best as we can, maintain the expectation that it will be taken care of in a timely way,” Volcker said in a recent interview with Bloomberg.
Volcker, whose recommendations inspired the restrictions on bank trading that President Barack Obama sent to Congress, said U.S. lawmakers must now prove they can pass the “comprehensive” legislation needed to prevent another financial crisis.
“That is the test,” said Volcker. “Congress has not been very good at passing any comprehensive legislation in various areas.”
Banking rules “shouldn’t be a matter of partisan dispute. But everything seems to be infected by partisan disputes in the U.S. now.”
“There is a lot of lobbying out there on the other side,” Volcker said.
President Barack Obama proposed the "Volcker Rule" in January as the administration sought new ways to crack down on risk and size at financial companies, The Wall Street Journal reports.
The White House wants to prevent companies with federally insured deposits from engaging in "proprietary trading," or taking speculative trading bets with the company's own money.
Meanwhile, the Federal Reserve is expected on March 31 to finish a yearlong program involving the purchase of some $1.25 trillion dollars of mortgage-backed securities, which has been widely credited with pumping up the housing market.
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