Chair of the Board of Governors of the Federal Reserve System from 1979 to 1987.
In 1979, President Jimmy Carter’s job approval rating had reached a low point, and Americans continued to express their anxiety about spiraling inflation. Carter nominated Paul A. Volcker to chair the Board of Governors of the Federal Reserve system. Born in Teaneck, New Jersey, Paul Vol-cker held a master’s degree in political economy from Harvard University and had also studied at the London School of Economics and Political Science. He worked as an undersecretary in the Treasury Department before becoming president of the New York Federal Reserve Bank. On July 30,1979, the Committee on Banking, Housing, and Urban Affairs of the U.S. Senate, chaired by U.S. Democratic Senator William Proxmire of Wisconsin, held a confirmation hearing. Volcker brought a wealth of experience from service rendered in the banking industry as well as in both Democratic and Republican administrations beginning with the administration of President John F. Kennedy. Senator Proxmire expressed concern that Volcker would be out of touch with the concerns of average workers and too attuned to the desires of Wall Street, but Volcker was approved over Proxmire’s objections.
When Volcker was confirmed as chair of the Board of Governors of the Federal Reserve Board, he added stability to the board’s membership, promulgated innovative policies, and arguably doomed the reelection bid of President Jimmy Carter in 1980. Although real income grew over the course of the Carter administration, the gross domestic product actually shrank during the first six months of 1980. No incumbent presidential party has ever retained the White House under such circumstances. Volcker’s (1980) policy ofhistori-cally high interest rates made recovery by the first Tuesday after the first Monday in November highly unlikely. Walter Dean Burnham has observed that Jimmy Carter had contributed to his own loss by nominating Volcker, who “executed a revolutionary policy change: targeting money supply rather than interest rates—thus producing the highest extended real rates of interest since the post-Civil War Great Deflation of 1865-1880, and in time quite effectively killing the inflation dragon, as it was intended to do.”
Volcker was reconfirmed as chair during the administration of President Ronald Reagan (1981-1987). He and his successor Alan Greenspan are the only two people to chair the Board of Governors of the Federal Reserve Board since 1979.
