Volcker to Step Down as Chair of Obama's Economic Recovery Advisory Board

Paul Volcker
Paul Volcker

Paul Volcker, chairman of the Economic Recovery Advisory Board for President Barack Obama, is set to step down from the position next month. As a key adviser to the president, Volcker has advocated for tougher financial regulations and counseled the government on fiscal policy.

Volcker, who served as Federal Reserve chairman under Presidents Carter and Reagan, is often credited with combating high inflation during the 1980s. In the recent crisis, he became famous for promoting what became known as the Volcker Rule, which puts limits on proprietary trading by U.S. banks.

Volcker advocated barring lenders from committing their own funds to speculative investments, such as private-equity investments to mortgage-backed securities and other sophisticated bets. He believes that kind of speculative activity was partly responsible for causing the financial crisis. Wall Street banks largely disagreed, and opposed the Volcker Rule. In the end, a much softer version was included in the 2010 financial reform bill.

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The President's Economic Recovery Advisory Board was created on Feb. 6, 2009, as a panel of non-government experts with a two-year mission to advise Obama on his plans to revive the U.S. economy. Obama is considering extending the board's mandate, but 83-year-old Volcker has chosen to bow out.

The Associated Press first broke the story, and other media outlets have been told the same by their sources. A formal announcement is expected Friday.

Volcker's departure follows the resignation by Lawrence Summers as Obama's chief economic adviser in September. Obama is likely to announce who will be taking over as director of the National Economic Council on Friday.