Volcker Sees ‘Long Slog’ for U.S. Economy, Seeks Bank Limits

18 September 2009  Bloomberg.com

Paul Volcker, the former Federal Reserve chairman who’s an economic adviser to President Barack Obama, said there’s a “long way to go” before the economy returns to pre-recession levels.

“It will be a long slog -- a matter of years -- with the risk of some relapses along the way,” Volcker said yesterday at a financial conference in Beverly Hills, California. While Volcker said he sees signs that the economy is in the “early stages of recovery,” he also warned that “it is way too soon to resume business as usual.”

He echoed Fed Chairman Ben S. Bernanke’s assessment on Sept. 15 that while the recession is probably over, “it’s still going to feel like a very weak economy for some time.” Volcker, who pushed the federal funds rate as high as 20 percent to throttle inflation in 1980, also renewed his call to restrict the activities of banks so large that their collapse would threaten the financial system.

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