By common consent, Paul Volcker is never happier than when he is casting for trout in a river or lake, far from the chaos of New York and Washington.
Then, the former chairman of the Federal Reserve will happily wait long hours before landing a catch, and afterwards share in the bonhomie of his fellow fishermen. “When he is away fishing he is a delight,” says Jim Wolfensohn, the former World Bank chief who hired Mr Volcker to join his investment firm on leaving the Fed. “He lets his guard down and nobody is interested in his views on interest rates.”
That quiet patience is now serving Mr Volcker well. Almost exactly a year ago, Mr Volcker presented a report calling for restrictions on banks engaging in risky activities such as proprietary trading while continuing to enjoy taxpayer support for insured deposits.
It was ignored. Though Mr Volcker played an important role in the Obama election campaign, validating the inexperienced candidate, during the past year he appeared to be cast into the outer political wilderness, a lonely advocate of radical structural reforms – almost a figure of fun.
The former Fed chief was given an advisory committee to chair. But actual policy was made by Treasury Secretary Tim Geithner, National Economic Council chief Larry Summers and White House budget director Peter Orszag.
However, this week the towering former Fed chief stood by Barack Obama’s side as the president embraced what he dubbed the “Volcker rule” banning proprietary trading – over the reservations of some of his most senior economic advisers.
It was his second recent triumph: three months ago he proposed to his longtime, ultra-loyal – and equally patient – secretary Anke Dening. “It’s a real fairy story – who would have thought it at the age of 82,” says Tim Collins, a Wall Street financier who attended their engagement party and reports that both were suitably radiant.
For Mr Volcker and his admirers, his return to policy influence is only the latest episode in a long career of public service.
Born before the Great Depression on September 5 1927, Mr Volcker was raised in Teaneck, New Jersey, the son of a city manager. He became an avid fan of the Brooklyn Dodgers, as fellow Dodgers fan and former Treasury secretary Nick Brady recently discovered at a dinner.
“We spent over an hour remembering the guys who played in the 1947 world series,” says Mr Brady.
Mr Volcker graduated from Princeton summa cum laude, then went on to Harvard to do a masters in public administration, during which time he interned at the Fed. Long stints at the Fed and the US Treasury, interspersed with periods in the private sector, culminated in his appointment as Fed chairman by Jimmy Carter in 1979. There he famously crushed the great inflation of the 1970s at great cost in lost output and jobs.
A titanic public figure at the time, he always lived frugally. “He smoked 10 cent cigars, flew the shuttle up and down [between Washington and New York] – never first class, a true public servant, with a wife who was not terribly well, and very little income,” says Mr Wolfensohn.
Since leaving the Fed more than two decades ago, Mr Volcker has taken on the role of financial elder statesman, rather than chasing lucrative posts at Wall Street banks.
In 2005 he took on an 18-month investigation into corruption in the United Nation’s Iraq oil-for-food programme. Friends say he has a sense of duty to apply his experience to current problems – and a strong progressive streak.
“People might be excused for thinking he is the ultimate bureaucrat but he does in fact care very much about the equitable distribution of resources, about making this a better country,” says Mr Wolfensohn.
Long appalled by the lack of what his former protégé Gerry Corrigan calls “financial statesmanship” on Wall Street, Mr Volcker has become increasingly critical of banks since the financial crisis broke.
In mid 2009, he joked that the only useful recent banking innovation was the invention of the ATM; by late last year, this was no longer presented in jest and he was deploring excesses in risk-taking and bonuses.
Some bankers retorted that Mr Volcker was out of touch with the 21st century world of cyber finance. His demeanour certainly hails from another era: he refuses to use e-mail, writes longhand (or dictates to Ms Dening) and his hearing aid works imperfectly.
Some bankers – and even serving officials – also question whether Mr Volcker has chosen the right target to attack, by focusing on activities such as proprietary trading that did not play a big role in the financial crisis. Distinguishing between risk-taking on a bank’s own account and risk-taking in the course of providing services such as market-making, securitisation and customised derivatives to clients is much easier to do rhetorically than in practice. Any serious crackdown risks impeding services to clients and driving activity overseas. “I don’t think he gets it. There is a clear lack of appreciation of the complexities of global finance,” says a former US official.
However, Mr Volcker’s supporters insist he understands risk better than most contemporary whizz-kids and that his proposal is aimed at preventing the next crisis, not the last one. In any case, this back-to-basics, frugal image now resonates well with many Republicans and Democrats alike.
On one recent visit to Capitol Hill, he bumped into Ron Paul, the Texas Republican author of the book End the Fed. Mr Paul said – only half in jest – “I think we’d all be doing a lot better if somebody like you was in there.”
No wonder, then, that after last week’s Massachusetts senate election setback, Mr Obama turned to Mr Volcker’s plan to drive a political fightback. And if Mr Volcker was surprised, he is far too seasoned to admit it.
“He understands that some days the fish are there and some days they are not,” says Mr Brady. “That does not mean he does not like catching the fish.”
Meanwhile, Washington wags have a different story to tell. The 6ft 7in tall Mr Volcker was, they say, simply too big to fail.
Additional reporting by James Politi