Paul Volcker: ATM Was the Peak of Financial Innovation

by: Tim Iacono

Speaking at the Wall Street Journal's Future of Finance Initiative yesterday, former Federal Reserve chairman Paul Volcker looked to finance's recent past and saw little to like, noting that he has yet to see any evidence that financial market innovations have provided any benefit to the economy.

Apparently, Volcker thinks the industry reached a peak when it invented the ATM and, given what's happened over the last year or two, it's hard to disagree with that view.

He said, "It really helps people, it’s useful."

This, as opposed to what was broadly considered to be "innovation" by his successor at the central bank in the form of derivative products such as collateralized debt obligations and credit default swaps that "took us right to the brink of disaster."

He also called for the return of Glass-Steagall, a move that would again separate commercial banking from investment banking, and criticized compensation plans that had become too generous and, as we've come to find out over the last couple years, too dangerous.

"Tall Paul" reportedly left the stage to thunderous applause.