in his office in new york's rockefeller center, paul volcker fills the hallway.h in height -- he's 6'8 "-- and in reputation. he spent eight years as chairman of the federal reserve. and these days he's again casting a giant shadow over wall street. do you believe the culture on wall street has to change? >> yes. reporter: in the after math of the financial crisis, volcker has led an outspoken campaign to curb greed and speculation. >> my concern has been the health of the banking system. >> reporter: for nearly two years the 84-year-old economist chaired president obama's economic recovery advisory board, helping to shape the president's banking reforms. in january of 2010, mr. obama urged congress to enact... >> a simple and common sensory form which we're calling the volcker rule after this tall guy behind me >> reporter: the draft of the president's speech that morning had not included volcker's name. were you surprised when he called it that >> i was absolutely surprised. i knew nothing about it until the words came out of his mouth >> reporter: how do you f

that power made fed chairmen like alan greenspan, paul volcker and ben bernanke-- well known faces. but, since the financial crisis of 2007, 2008, the fed's role expanded further, as it helped prevent another great depression. >> if you had asked me five years ago, i would have said the single most important role of the fed was macroeconomic stability and it's monetary policy. but, it recent years, financial market stability has become just as important. >> reporter: next week, we'll continue our special series on the fed. we'll look at the central banks' players and power. suzanne pratt, "n.b.r.," new york. as we mentioned earlier, the greek election is this sunday. we'll have complete coverage on monday of how the markets react to the outcome. and if president obama's health care reform gets struck down.. how will that affect company balance books? >> tom: our friday market monitor guest is not losing sleep over the greek elections. john dorfman runs thunderstorm capital. he's in boston tonight. john, it's always nice to see you. last time you were with us, you thought the worries

we had 11% unemployment in 1982 after paul volcker ascended to the chairmanship of the central bank. in 1974 we also -- 73, 74, 75, followed by the worst decade in american economic history after of the second world war also inaugurated by central bank management of the monetary system. so perhaps mon -- all i mean to say is, it's always compared to what? on this -- which i think the gold standard, the classical gold standard, for example, stands up very well to the age of central banking, establish in the united states of the last 100 years. on the cost of the gold standard, the cost of the gold standard is but a fraction, a small fraction, of the cost of the management paper currency system. just give you one equation to think about. it appears that the total cost of the monetary system under the classical gold standard was about one-fifth of 1%. that is to say, the cost of mining gold as the source by which the monetary standard was -- >> one-fifth of 1% of what? >> one-fifth of 1% of output. forgive me. whereas today, all you have to do is walk down park avenue and look in the wi

: the volcker rule. >> the volcker rule. paul's recommendation was that these banking enterprises shouldn't be betting on whether the markets go up or down, or the yield curve twists or flattens, these types of things. and yet, at the same time congress said to us regulators, let's make sure they can still hedge, because that's a good thing to lower risk as well. >> charlie: right. >> lower risk to the taxpayers of a possible bail-out. let's not have them punting and batting like a hedge fund, but let's lower risk also by letting them hedge. therein you have the challenge to the regulators, because it's ban one thing, allow another thing, and unfortunately sometimes people use the word "hedge" in an expansive way. so in this circumstance, again not speaking of the specifics -- >> charlie: right. >> -- the question is would this have been allowed, should it be allowed under -- when we finalize -- >> charlie: what does gary gensler say? >> i think congress has spoken to it. congress has said that hedging for specific risk of individu

some suggest that the volcker rule named for former fed chairman paul volcker might have precepted thelosses. >> i understand the intent of the volcker rule. reduce activities to yep diaz financial company. i completely understand that. i think the devil is in the detail to allow good of the capital markets and not the bad. >> he was asked about the impact recent regulations having on the jp morgan bottom line. >> heavy regulatory cost increased as a result of the dodd-frank, volcker rule, whatever it is. >> a rough estimate. $1 billion a year. >> for those involved in the trades, the ceo says there may be so-called clawbacks meaning they may forfeit stock a bonuses. that led a lawmaker to slam congress. >> it is comforting to know with a $1 billion loss in trade last year, the company still i think had a $19 billion profit. during that same period. we lost over $1 trillion. if we had a clawback provision, none of us would get paid here. >> mean while, fox business correspondent charlie gasparino uncovered jp morgan chase report from last year that was not made public showing the state

that was good until it was repealed them paul volcker got another version called the volcker rule brought into the dodd/frank act. these banks were bailed out by the government costing taxpayers money. he wanted to define their rule differently but it is the same idea. they cannot do proprietary trading. then you are bogged down. i don't think they are uniformly evil. i have a chapter on my book on the lobbyist. most people are a mixture. they played out you shutdown these activities but then to provide services to the customers? you will destroy our banking system and will not be competitive. if you tinkered just a little bit to it gets functioning? i thain life is in the middle. but then with the efficient markets. the volcker rule is difficult to discuss in a venue like this but it is not wrong for government to get involved to ask your investments are how does that continue with the ipo? >> this gives back to karl marx most people say it does not fulfil any social functions by issuing stock so what is the activity for? it turns out companies to issue stock. >> the notion it contribute

first the appointment of paul volcker and although he has two jobs to fight inflation and create employment he said at that time i will no longer concern myself with full employment. i will only concern myself with fighting inflation. that has been the position under every president democrat and republican alike until this very day. we are down 12% of the work force. we think collective bargaining is the cornerstone to a balanced economy so that everybody has a chance to get a little more of the wealth that we produce. it is not that they don't have money. we do have money. whether richest nation that have never been. corp. serve two years of record profits and $2 trillion in the bank. banks have $1.6 trillion sitting in the bank. they're not lending. continue to shrink their way out of this. if we create jobs and grow your way out of this revenue increases and you don't have to worry about cutting down. you have to worry about investing in the future with your readers education for our children that need an education, converting bad judge in to good jobs. i came out of the coal mining jobs

. >> paul volcker feels that jpmorgan is too big to manage and that's the problem. coming up, if you're just joining us, the bulls would have liked more from bernanke but at least it got a promise to act again if and when the economy gets worse. that seemed to be enough. >> what else do they want from bernanke? >> if we close where we are right now, the dow would have the best three-day win streak going back to last november. it also helped to have china and their central bank cut their rates overnight by a quarter percent, showinging that they are looking for growth in their economy as well. the dow up 108 points. it's been meandering and the s&p 500 index is also higher with a gain of 7.75 points. a good day for the bulls in today's closing exchange. we have mark harris, paul christopher, and rick santelli is out there with maria in chicago. we've got scott wapner joining us as well today. they are out there -- >> go ahead, maria. >> i was just saying, there is a question whether we're going to see the qe 3. the fact that bernanke brought it up, that he has the gu

law should know that if huge trading losses like this happen after we establish the ballgirl -- paul volcker rolle and capitals have been implemented, i think it would be out of your hands if it goes belly up next time. in this case, -- what if you have read these traits, what is to stop them from losing multiples of that, billions more the next time? or even more significantly, a less well-capitalized bank from losses that could bring it down? i just don't see where the circuit breakers are here. i don't see where the ability to ensure that in fact, that type of decision making does not become the collective risk of all of us again in this country. i don't think the american people, and certainly this senator, are willing to go down that road. i don't know what it takes to get everybody to understand that we are serious in purpose here to ensure that the law is fully implemented. i know there are those who disagree with the law, but americans are free to disagree with the law, but not free to disobey it. they are not free to disobey it. this senator, for one, will continuously pursued to ma

paul volcker who are concerned about financial reform. it is getting bogged down. not a lot has been accomplished. voice and explain what needs to be done and perhaps provide a counter to some of the special interests. why hast: one reason not moved faster? guest: i think there are two problems. there's been a calculated effort to drag this out. they start losing interest and losing faith. the more you drag it out, they hope the rules get watered down. congress created an oversight panel that was designed to be a coordinating body for getting these rules done and making sure they are communicated to the public. we're not been given much leadership. you have a negotiated process. the industry knows that. you end up with a lot of complicated rules. a lot of exceptions that are difficult for the public to understand. host: wh voice do you hope to have? guest: we are going to prioritize. we are having a press event. there are six issues that we need to focus on. there will be at high level pronouncement and we will follow that with commentary and identify additional pr

guest: paul volcker was advising president obama. the tip of reform in his name, the volcker rule. it said these large financial institutions would be prohibited from proprietary trading. what is proprietary trading? a betting on the markets will go up or go down so quickly. that will lower the risk of the taxpayers. the cftc has a role of one of five agencies -- i think you have them all on your tv show. you can chat with mary tomorrow because she is helping corral all of us together from the treasury department. to prohibit proprietary trading so that taxpayers are protected from some of the bets that we as taxpayers a bore in 2008. it is one of the most challenging roles the congress gave us. they gave us as 60 different rules to implement. we propose all of them under federal laws. we take them under, and then finalize based on public comment. i think that is a good process, even though it is very along and sometimes appears bureaucratic. host: how much of that is influenced by the industry? guest: a tremendous amount of it. the more we hear from investors, academics, it helps

guest: paul volcker was advising president obama. the tip of reform in his name, the volcker rule.it said these large financial institutions would be prohibited from proprietary trading. what is proprietary trading? a betting on the markets will go up or go down so quickly. that will lower the risk of the taxpayers. the cftc has a role of one of five agencies -- i think you have them all on your tv show. you can chat with mary tomorrow because she is helping corral all of us together from the treasury department. to prohibit proprietary trading so that taxpayers are protected from some of the bets that we as taxpayers a bore in 2008. it is one of the most challenging roles the congress gave us. they gave us as 60 different rules to implement. we propose all of them under federal laws. we take them under, and then finalize based on public comment. i think that is a good process, even though it is very along and sometimes appears bureaucratic. host: how much of that is influenced by the industry? guest: a tremendous amount of it. the more we hear from investors, academics, it helps a

. >> paul volcker says the trading loss may show the large heest b are too big to manage. the so-called volcker rule would ban banks from making speculative bets with hair own funds if they enjoy federal guarantees. >> in news out of washington, harry reid making a new offer on student loans. unless an agreement is reached, the interest rate set to double on july 1st. he suggested proposed changes in plans be used to cover the cost of sfwending the -- >> why are you saying this so we weekly? >> because you're either eeatini want the camera to -- >> i'm very interested in stupt lo student loans. >> i got you to talk anyway with a mouthful. >> nobody was able to see. >> if i got this done quick enough, would you have had to read the next story. >> senate republican leadership aide says the propose would be reviewed and that it may represent -- >> you talked so long that they -- >> so it was supposed to be you. >> the floor is yours. >> do you want to bring up any of my personal habits at this point again? >> no, that was me. sorry. >> oh, with the kids. okay. yeah, that was

what is your -- paul volcker rule had been in effect. what is your opinion? >> i do not know. if it did not prohibit it, it would not bother me. >> putting aside the question, since the regulators who wrote it cannot seem to answer that question, what is your view on whether it should be prohibiting? >> it for textile companies. in times of dramatic credit crisis. i do believe we should be allowed. >> some have suggested the your position as a board member on the new york federal court is a significant conflict of interest and has suggested the you and other bankers who sit on the board should resign your positions. how do respond to that? >> the federal reserve's rules are written. i should tell you that i did not vote the president. i do not get involved in the supervisory. i cannot serve the audit committee. the board basically sit around and talks at the economy, what is going on. that information is put together and sent to washington. is more informational advisory group and never the lawmakers think is right is fine with me. if i was the head of board, i would want to h