Volcker Says U.S. Financial System `Broken,' Losses May Rise

[girl gone mad]

Sept. 5 (Bloomberg) -- Former Federal Reserve Chairman Paul Volcker said the U.S. financial system, dependent upon securitization rather than traditional bank loans, is broken, and may contribute to the weakest expansion since the 1930s.

``This bright new system, this practice in the United States, this practice in the United Kingdom and elsewhere, has broken down,'' Volcker said today at a banking conference in Calgary. ``Growth in the economy in this decade will be the slowest of any decade since the Great Depression, right in the middle of all this financial innovation.''

The former Fed chief projected ``a lot'' more losses from the collapse in the mortgage-backed debt market, after the more than $500 billion tallied so far, should the U.S., European and Japanese economies fail to pick up. He urged changes in financial regulations, echoing calls among sitting officials and legislators.

``It is the most complicated financial crisis I have ever experienced, and I have experienced a few,'' said Volcker, who has endorsed Democratic presidential candidate Barack Obama. Volcker ran the Fed from 1979 to 1987, and engineered an increase in interest rates to 20 percent to quell inflation that exceeded 10 percent.

Edited to add: link (sorry!)

http://www.bloomberg.com/apps/news?pid=20601087&sid=aw4J8Ty2h3fE&refer=home

[skooooo]

1. Obama's going to win. nt

[no_hypocrisy]

2. The system didn't get that way by itself.

Say it Paul Volker. Say the words.



MISERABLE FAILURE!!!!

[BeatleBoot]

3. Paul Volcker was the original from the Carter Administration

I always run across people who tell me all about Alan Greenspan and how great he was.

Paul Volcker was the guy before Greenspan and is more of an intellect than Greenspan will ever hope to be.

[girl gone mad]

4. Volcker saved our asses..

that's for certain.

He made some tough, but correct moves. Greenspan feebly let the party go on and on, for the political benefit of the Republican party.

[BeatleBoot]

6. Thank you GGM!

It's nice to see that others appreciate Mr. Volcker as much as I do.

[westerebus]

5. Pain.

Volker did what he had to do. Cd's paid 8% if you had money to put in one. Car loans at 16% were common with six years to pay it off was the only way they were affordable. Rents went through the roof as apartments became condos. Mortgage rates at 12% with points and PMI as the property taxes soared in cities as services were cut. Oh, the good old days of Paul Vocker. I just can't wait!

[Ah Xoc Kin]

7. better it comes out now

Better weaknesses become known now than later, when there's
even less chance of dealing with them effectively.