Paul Volcker: Geithner Is Surrounded by Private Advisors

September 11, 2009 (LPAC)— On the eve of the anniversary of the Lehman Brothers crash, Paul Volcker is interviewed by the Italian financial daily Il Sole 24 Ore. Volcker reiterates his proposal for a return to Glass-Steagall type regulation, and hints that Treasury Secretary Tim Geithner is under the control of Wall Street.

"The influence of money and lobbies on Washington has reached a shameful level. Not to mention the fact that, since many Treasury nominees have not been confirmed by Congress, Geithner is surrounded by private advisors. Eight months into the new administration, the Treasury does not yet have a staff of [its own] officials. And this raises the question of using informal advisors who come from Wall Street. It should not happen."

On his proposals to reform the system, Volcker says:

"Banks should be treated differently from other financial institutions, and their activities should be limited. Banks should not own hedge funds or stock funds, and their trading activities should be limited. An institution that produces most of its income through trading should not have a banking license. If it wants to make trades, that's OK, but not as a bank, because banks have particular protections that should not be extended to everyone."

What are the obstacles to such a reform?

"There are a lot of people who make a lot of money in finance, and want to keep doing it."