still, volcker held to his long-term course.solidating and extending the heartening progress on inflation will require a continuing restraint on monetary growth and we intend to maintain the necessary degree of restraint. schoumacher: by 1982 the economy had fallen into the deepest recession since the great depression. even the reagan administration was urging the fed to relent. but volcker and the fed board, determined to bring inflation down, held tight. finally, in late 1982, the fed saw inflation drop substantially and eased the money supply. this last week the federal reserve bank decided to lower its discount rate to 9.5%, the first time this key interest rate has gone below two digits since 1979 and the fifth reduction in just four months. this demonstrates the fed's confidence that inflation and market rates will continue coming down and its confidence that we can work together for a healthy, non-inflationary recovery. schoumacher: throughout the recovery that followed inflation held at 4%. though inflation had been subs

in august, volcker announced an easing of monetary policy. wall street was first to respond.ter memories of the recession lingered on and faith in countercyclical policy was a casualty. many people blamed the misery on the failures of 1970s stabilization policies. others, like congressman reuss blamed the unnecessarily harsh policies of the 1980s. in my view, curing inflation could have been done without stepping on the brake so hard the economy was thrown through the windshield. by christmas, the economy was growing again. workers began returning to their jobs, and inflation held at 4% throughout 1983. by 1985, after two years of recovery, inflation remained at 4% but the economy still bore the recession's scars. millions of manufacturing jobs were gone. unemployment remained stuck at 7%. 15 years of entrenched inflationary expectations had been sharply reduced but only after the government proved willing to pay the price to wring inflation out of the economic system. we asked richard gill why tight monetary policy caused such hardship. taking a benign view one could argue t

many are not covered by volcker so this is something that requires a lot of analysis.i'm happy to share with you the analysis. >> in many regards i think fsoc is creating more problems by diminishing liquidity in the marketplace which will create future problems potential in the marketplace. is that a concern to u.s. chairman of fsoc? >> we are all concerned about making sure we maintain the most liquid markets in the world. i do think it's a mistake to attribute to revelatory policy what happened on october 15 and i would be happy to follow up with you. >> the time of the gentleman has expired. the chair now recognizes the gentleman from california mr. sherman. >> one comment for the record in the materials for this record we talk about preserving our veto at the imf. we don't have a veto at the imf. i talked to the number to two over there saying could we prevent loans or economic aid to iran and he made it very clear that was not the case. i remember when prior administration urged us to put more money in the world bank because we had a veto there and iran got over

many are not covered by volcker so this is something that requires a lot of analysis. i'm happy to share with you the analysis. >> in many regards i think fsoc is creating more problems by diminishing liquidity in the marketplace which will create future problems potential in the marketplace. is that a concern to u.s. chairman of fsoc? >> we are all concerned about making sure we maintain the most liquid markets in the world. i do think it's a mistake to attribute to revelatory policy what happened on october 15 and i would be happy to follow up with you. >> the time of the gentleman has expired. the chair now recognizes the gentleman from california mr. sherman. >> one comment for the record in the materials for this record we talk about preserving our veto at the imf. we don't have a veto at the imf. i talked to the number to two over there saying could we prevent loans or economic aid to iran and he made it very clear that was not the case. i remember when prior administration urged us to put more money in the world bank because we had a veto there and iran got over

paul volcker in the 80s had a completely opposite problem. folks, i don't know if you know this, he tightened rates to 20% because we had skyrocketing inflation of more than 11%. unemployment 10%, and you know what it did? it saved the nation, solved the problem. why is everybody so scared of a half a point tightening, when he was at 20% interest rates? >> you know, like you say, the problem we had back then was inflation was way too high, and he raised rates to bring it down. the problem yellen confronts is inflation has been too low and it's been low, it's been below 2% goal for three years, basically for most of this recovery, inflation has been below their objective. the market, i think, people get very excited about a possibility of one little move by the fed, but because inflation is so low, when the fed moves, it's going to be a little move, they're not going to be raising rates the way paul volcker did 30 years ago, they're doing it in small incremental steps. liz: all the more reason not to fear it, and the market would grow up and n

i wondered what the administration consider a small exception from the volcker rule louisiana. >> is to be credited only small bank that is affected as those that engage in proprietary trade. so the standard for the compliance reflects the differences between small and large firms and the challenges that make sure all of this is safe and sound. >> i see that we should we should pass this commonsense reform, any of this can be improved and it would join with us trying to make these improvements. >> the chair recognizes the gentleman from florida. >> thank you, mr. chairman. thank you for being here. >> i do want to talk about something. we came back with some regulations with regards to important financial institutions. while i think it is a step in the right direction and i'm concerned that this didn't go far enough. they did not address concerns about how to mitigate systemic risks like not creating a process and for example today's law, a non-bank financial institution that is being considered doesn't really have any guidance to be made aware and they don't have any mechanisms are

what is volcker -- walker going to do? he does have infantry support other than artillery support. he starts to get his men into a rough time i and starts running towards appomattox station. just about that time, a fourth train comes in, pushing more supplies from lynchburg. this is actually pushing it, the trains into the station. when it's either federal cavalry there, they throw the engine into reverse and it breaks the couplings, so it leaves the cars and the supplies, but the engine makes it back to lynchburg and escapes. this is a very unusual battle. it is confederate artillery against federal mounted cavalry. i tried to find another battle like this in the civil war, and you can't do it. there is not a battle like this anywhere else in the american civil war. mounted calvary attacking unsupported artillery. so the battle starts off at about 4:00 here at and what happens is custer cents april grade -- sends a brigade forward. but it is not a good area for fighting a battle. it is mainly shrubbery and dense forest. some trails leading through the woods. so it is very difficul

but the cacophony is a good phrase here because you look for example, at the volcker rule, you can beybody can support is that five regulatory agencies are have to approve every interpretation and every definition under the volcker rule. >> the federal reserve, of course, has taken the lead in some of the bank regulation and govern dan tarulo at the heart of that. janet yellen called it brazen wrong doing by the industry. do you agree with that? do you see any evidence that that is still going on and that we're not just prosecuting things that happened in the past? >> i am relatively confident that what we saw in the past is not going on today. banks have put an enormous amount of resources, emotional as well at monetary into improving culture and into improving compliance. chair yellen is right to talk about some of these activities in the past as being brazen. but i think it was not the industry. it was subcultures within these banks which were flourish. >> you can't change culture by super vision. how confident can you be the subcultures won't keep bubbling up at different times in

volcker, i'll ask you a question about drug use.obviously there's an ongoing discussion about a dangerous addictive drug marijuana. many people don't think it's dangerous or addictive. but it is. it affects a lot of things that are probably not good for people especially our youth. do you know what the economic impact of marijuana use is, including its effect on work force preparedness on education? do we have these answers? are these important things to study? and do you have the resources to study these things before we go willy-nilly into legalizing a dangerous addictive drug? >> thanks very much for your question. and indeed there's been many studies that have evaluated specific consequences of use of marijuana among teenagers vis-a-vis the educational achievements. they have consistently shown that it actually decreases -- smoking marijuana, it decreases the likelihood you will finish school and that you will get a degree. with respect to its impact in the work force, the data there is much less clear. the studies have not been

the volcker rule that needs to be reviewed and yet, all of this is apparently outside the scope of a process that the agencies are now undertaking. could you respond, please? >> so, in the rules that have gone into effect were in the process under consideration and will go into effect related to dodd frank, we had federal register notices, took public comment and important part of designing those rules was considering the cost, the burdens and what was the most effective in the, and appropriate way of designing regulation regulations to meet dodd frank objectives. so, in the sense, what a grip asks of the agencies is something that we have gone through very recently in the process of designing regulations in some cases that have not yet even gone into effect. >> is would your answer be the same for the consumer financial protection? because it's new, that we don't need to review its rule sns. >> i really can't speak to you know, we don't, we don't have that rule making authority and i'm sure i can't speak to what rule the cfpb is going to play. >> i understand the argument. that's th

david: mark, one more question on this, there are some fed presidents and fed chairman like paul volckerfor example, who didn't give a damn about the markets. all he cared about is what he is supposed to care about, value of dollar and unemployment. just those two things. he squeezed inflation out of system. caused recession. markets hated him. isn't it time we get somebody who is not doing stuff at the behest of the markets as a fed chairman is supposed to be in the interests of all americans? >> i think it's a very fair point, david. i think, concentrating on the market also leaves you painted in a very tough corner sometimes when you're forced to address language that really doesn't reflect what you feel. i think everybody had concentrated on this patience term. whether we would get patience panic, similar to a couple years ago. david: yeah. >> look the u.s. markets have been underperforming those countries with qe, similar to europe and japan. all those markets done far better than u.s. last couple months. that is what is important to concentrate on. >> they went down a lot before. t

estimate that very few of the banks if any that we supervise are engaged in activities covered by volcker but we have not taken a position. >> i would encourage you to consider this. the last point i would make, mr. brand, would you agree that there's nothing magical about the $10 billion figure? there's nothing intrib sick about one incremental dollar above that that suddenly gives rise to the activities? >> i would agree with that. >> second thick i want to touch on is that you also suggested that banks with $750 million in assets be examined every six months rather than 12 months. the size isn't the only thing that determines whether they get a little bit of relief? >> the primary driver is well managed, and the ability of these banks in terms of the risk, but their proven performance. we want to devote our attention to less-well-managed institutions but to lessen the burden on those banks that are performing well and managing themselves properly. >> i think that's very constructive approach. again, ms. everly and ms. hunter, have you considered this, and are you open to this type of r

would the administration consider a small bank exception from the volcker rule? >> just to be clear the only small banks that are affected are those that engage in proprietary trading. and the starts for compliance for small firms reflect the differences between small firms and large firms. i think the challenge is to make sure that all of our financial institutions are as safe and sound as -- >> i see the challenge as getting the administration to work on some of this and stop protecting a law that its author said needed some changes. it's passed in bipartisan ways over and over and over again. of commonsense reform any legislation that passes out of here can be improved. and absolutely this is a law that could be improved. it would be very helpful if the administration would join with us in trying to make some of those improvements. my time is expired. i yield back. >> chair now recognizes the gentleman from florida, mr. ross. >> thank you, mr. chairman. mr. secretary, thank you for being here. read nothing into the fact that i'm on your extreme right here toda

the breaking of volcker. what people don't know is how much time we've spent under 2%. if 2% -- if a guy like calamiris put pixels in the air and pixey dust and came up with the number that 2% is the important number and we've been under it a lot as we look at the core p.c. inflator. >> the fed is looking over their shoulder at congress and always better politically or has been until now to undershoot than overshoot but in theory at 2% and we'll blame charles for this. if 2% is the target we should see a nice wavy line above. but that's not what we saw. consistent undershooting. tom: what's great about this is it's march at bloomberg surveillance. we're done with the algebra in january. we need to move seriously on to what occurred in russia and another motion of friday. will there be more violence after boris nemtsov was gunned down in moscow? the singular question will fervent supporters of putinism use violence to crush a small but quiet russian opposition. tony is with bloomberg news in moscow and joins us now. what do you know this morning about who killed mr. ment

paul volcker, dick fold a lot of the big bankers at goldman sachs larry fink the guy who runs blackrock meeting with him at that place right next to the fox news headquarters in washington johnny's fish -- it's right downstairs. stuart: is that right? >> they basically raised money for him. elizabeth warren is not even close to that right now. stuart: listen to what you're saying. are you saying that corporations actually run these elections? >> they -- stuart: with that money? >> they give a lot of money, and you need some of that money. i don't think you can run as a pure populist without any sort of support from wall street, from special interest groups on the right. excuse me from corporate special interest groups. i just don't think you can do that. she will not be able to do that and unless hillary clinton's e-mails come out with some sort of scandal, she's going to be the presidential nominee for the democratic party. i mean -- but the left just loves this whole thing. it's like a fantasy. of it's like i think elizabeth warren has about as much chance of unseating hillary clinton

curt volcker, former u.s. ambassador to nato, has written that this new cease fire amounts to and i quote, an institutionalization of a frozen conflict inside ukraine. alongside what happened in georgia and moldova. this is exactly what the kremlin wants. end quote. i have a couple of questions. do you think putin's objective is to create a frozen conflict like the ones in georgia? if so, what would be our response to that? >> i think his objective is to keep ukraine destabilized so it does not join the west. he is threatened by progressive democracies on his border, in my opinion. he is trying everything he can to prevent that from happening. in response, as secretary mckeon and secretary nuland have pointed out, we have implemented a wide array of initiatives focused on generating pressure economic diplomatic, and military, to try to force the russians to stop this behavior and respect the territorial integrity of ukraine. >> thank you. from a strategic perspective russia has kidnapped and estonian intellige

for sure the volcker rule has impacted the inventory that banks will hold on their balance sheets, butof the stories which isn't quite written about is the credit market's attempt to find the transparency and efficiency you have seen in the equity markets was really the synthetic credit market or the credit derivative market and the credit derivative market is seen as one of the causes of the financial crisis. so in a bank like deutsche bank for instance, makes the announcement they are no longer going to write individual name credit default swaps, that is a major shift away from transparency and efficiency in the credit market. you know the open interest in the cds market is well off of 60% of what it was going into the financial crisis. we have a very large market. it's very opaque. it's very idiosyncratic, but i think all the market is focused on this as a risk so it will not be a surprise. >> well at the same time we talk about going back to the banks. you know you came from jpmorgan. there's been a lot of criticism about the way the banks were run. you left it notably. so what's y

the ecb -- you think -- >> paul volcker did something unusual in history. >> you think the german bund> 27 basis points. >> you have to go but inflation will be a problem. we're running wage costs now better than 4%. >> all right. >> watch out for inflation in years to come. >> we'll have a part two coming up. >> watch for deflation. >> ron, david sowerby, thank you, gentlemen. we have more on oracle's earnings report with josh lipton. what can you tell us josh? >> kelly, it might be unusual in an earnings release for a company to directly call out a rival but that is exactly what oracle's larry ellisson does here saying we're well on our way to selling over $1 billion of new software as a service and platform as a service business in 2015. ellison goes on to say sales force has announced it also expects to add $1 billion of new business in these areas this year. so it's going to be a close race who sells more in the cloud this year. us or them. stay tuned, ellison says. benioff in his last earnings call called out oracle's cloud business saying listen it's easy to boast about an impre

i had a call sometime in this period from paul volcker. who was then the federal reserve chairman. and he said, you know, i really like what you guys are doing up there. i said, why is that? he says because i can't get at these banks who are simply throwing money at uneconomic real estate investments and it has to be through the tax code. so i think that's one of the reasons, at least for me, that i felt we were on strong ground. >> i think you did the right thing because it was abused. my point was if you could have transitioned prospectively in terms of passive loss rather than a clawback you might have prevented the savings and loans and the creation of the reits, which is basically what the ramifications were. >> i think you're right. >> one other question -- >> i wouldn't say the savings and loans collapsed because of the tax reform act. >> no, if was the last straw, i guess. >> yeah, maybe that's a better way to say it. >> my other question is did you consider in 1986 or have you thought since about going to a retail sales tax or a consumption tax instead of a progressive inc

when i was a kid working at the new york fed in open market operations, paul volcker made a fetish ofling anything. alan greenspan said he was proud of it he would talk and no one would know -- let me finish this point. i think that this is good for main street because i think main street gets cut out with the fed, all their signaling and so 230r9 forth. and it keeps the hedge funds honest. that may account for today's -- you don't know now. you may be right about september, but if the fed adds some mystery, i love it. >> dennis, how -- >> hang on. >> when yellen said that not to look at the schedule for press conferences to determine when they would raise rates, she actually said well if we do raise rates when there's not a press conference we can always schedule a press conference. she was really cagey about the future direction. >> yellen is trying to help the consumer in every way she can raising rates would help with certificates of deposit. we're looking to get more employment. but how does this help the average investor. if you have a 401(k) you go home and you go i heard denni

i had a call some time in this period from paul volcker who was then the federal reserve chairman. and he said, you know, i really like what you guys are doing up there. i said why is that? he said because i can't get at these banks who are simply throwing money at uneconomic real estate investments. and it has to be through the tax code. so i think that's one of the reasons. at least for me that i felt that we were on strong ground. >> i think you did the right thing with -- because it was abused. my point was, if you could have transitioned prospectively in terms of the treatment of passing laws rather than claw-back, you might have prevented the collapse of the savings and loans and creation of the reits which is essentially what the ramifications were. >> i think you're right. >> one other question i have. >> i wouldn't say savings and loans collapsed because of the tax reform act. >> no. it was the last straw, i guess. >> yeah, maybe. that's a better way to say it. >> my other question is, did you consider in 1986 -- or have you thought since -- about going to a retail sales t

>> almost every fed chairman's legacy is set in the years after they leave than was true of paul volcker a hero. alan greenspan's expectations and reputation have changed in the years since he's gone for better or for worse. i suspect ben understands that his legacy will be made in the years that are still to come. so being able to inform that to educate on that is part of what he thinks of his mission. >> part of what -- and define it because we know how the media in a vacuum the media will come up with its own narrative. if you're supplying it then at least you've got a chance of fair coverage. >> i think that's right. i think his legacy for being a fighter in the depths of the crisis that legacy will hold. but it's how do you win the peace? how do you respond to a period of 2% economic growth for a long time? what's the right policies there? not easy for an existing chairman to be reading a blog if the views are quite contradictory. >> right. >> but between ben and janet, nikly like to similarities. >> you can follow him on twitter, he tweeted about the blog. >> you didn't see -- >> i

i remember the old days volcker and greenspan, they'd come out of the blue.o say we might remove "patient" from a policy guide. we know everything they're doing. >> good for you. i think there's e mornormous amount of words going on out there. impatient, patient. it just -- >> extended time. >> of course it changes all the time. the so-called forward guidance. it changed at least every year since they started it. that's not a strategy. that's just one tactic after another. >> you're not talking about congress auditing the fed either. you're not talking about congress getting involved. >> no. the question is what's the best thing for congress to do. what's the best thing we can do. i think a straight audit is the answer. but say look fed. tell us your strategy. what are you up to. it's your job to do that. that's why you're there. you can change if you want to but tell us why you change. i think it would get more of a strategy in there. get it around the strategy situation we're in where you can see a lot of volatility. >> john what you bring up makes a lot of

volcker. that was 19%. >> but think about the inflation. >> no, i know. yp. i know.nd cause a recession. we've got plenty of -- >> well you don't know. that's the point. deflation is still the overriding principle in the global economy. >> rich thank you for coming in. >>> coming up squawk booze news. why you might be spiking your independence day punch with powdered alcohol. can you just snort it? why even dissolve it. stick around. reath in. . . and . . . exhale. . . aflac! and a gentle wavelike motion... ahhh- ahhhhhh. liberate your spine... ahhh-ahhhhhh......aflac! and reach, toes blossoming... not that great at yoga. yeah, but when i slipped a disk he paid my claim before i knew it. ahh! so he had your back? yep. in just one day, we approve and pay. one day pay, only from aflac. [duck snoring] e financial noise financial noise financial noise financial noise >>> welcome back to "squawk box." lumberly ly lumber liquidators holding a conference call coming up. it says it stands behind its products and offering free air quality testing. they say their total sales a

the volcker rule has made u.s. capital markets less competitive internationally creating unnecessary obstacles for u.s. companies to raise the funds they need to grow their businesses and create jobs. despite the stated intentions of this law, community banks and credit unions have been left to comply with onerous new regulations intended to prevent a repeat of the financial crisis they did not cause. the speaker pro tempore: the gentleman's time has expired. million barr: thank you, mr. speaker. let's join together, cut red tape and unnecessary regulation that is are holding our communities back. we can create real opportunity -- the speaker pro tempore: the gentleman's time has expired. mr. barr: by repealing this law and starting over. thank you, i yield back. the speaker pro tempore: members are reminded to heed the gavel. the chair recognizes the gentleman from tennessee, mr. cohen, for five minutes. mr. cohen: thank you, mr. speaker. i rise today to honor a great baseball player and baseball player befriended