Tribute to a great man

There is no dispute that Paul Volcker was the quintessential central banker, who vanquished inflation in the 1980s, and who instilled a worldwide respect for central banks and the idea that they operate best when free from political interference.

I was lucky to have known him during his stint with the Kennedy administration when he was a Treasury official, and then again when he worked at Chase Manhattan for David Rockefeller. But our relationship deepened significantly when I followed him to the Federal Reserve Bank of New York and worked directly for him for three years, before he was called to Washington, DC, by President Carter.

At the New York Fed, he was known as ‘Tall Paul’ and for many he was a remote figure who was hidden behind cigar smoke, spoke with a mumble and seemed to stare out to a distant point in mid-discussion. Conversations could end abruptly, with an “OK” and head turned away – no “thank you”, “see you later”, or other traditional wrap-up.

But for those of us who worked with him daily, we understood his innate shyness, warmth, sly sense of humour and deep commitment to policy. He also instilled an ethos of integrity for the institution and a spirit of teamwork that did not reward individual attention seekers or organisational climbers.

If his idiosyncratic communication style and the team-building outcomes seem inconsistent, I was witness on one occasion where I saw how he set, by example, the standards and behaviours that came to characterise the New York Fed as a whole.

We had travelled late one afternoon to Toronto, where he had to give an early evening speech to the local bond market association. We got there in time for the meeting, but not early enough for dinner. After the talk, we went to the hotel lobby, accompanied by some of the association’s senior officials. While checking in he asked, consistent with his famed tightness with money, how much the room cost. An association official quickly assured him that it was nothing to be concerned about because it was being paid for by his organisation. Paul explained that our rules forbid acceptance of such largess. The official responded that the rooms were part of a package deal and that a separate payment wasn’t possible. Paul shrugged, picked up his bag and said, “Sorry, I guess we can’t stay here.” There was a hurried conversation and they figured out how to charge us for our rooms.

As I’ve thought about this incident and many others, I’ve understood that Paul Volcker, without drama and by consistent exemplary example, established a standard for us all. It was leadership of the highest order and while his legacy will always be his policy successes, the high standing and unparalleled reputation of the central bank for probity and integrity should also be remembered.

Peter Bakstansky was senior spokesman and head of public information at the Federal Reserve Bank of New York from 1976–2006.