The rule took effect in July 2015. President Donald Trump, in 2017, ordered regulators to rewrite the rule and soften its effect. In an Aug. 20, 2019, letter to Fed Chairman Jerome Powell, Volcker complained that regulators had used “simplification” as an excuse to weaken the rule in a way that would amplify risks to the financial system.

Paul Adolph Volcker Jr. was born on Sept. 5, 1927, in Cape May, New Jersey, to Paul Sr., the coastal town’s manager, and his wife, the former Alma Klippel. The family moved to Teaneck, in northern New Jersey across the Hudson River from New York City, in 1930 when the elder Volcker, a civil engineer, became that town’s manager.

Known as Buddy to distinguish him from his father, Volcker had to repeat kindergarten because teachers interpreted his silent manner as a sign of immaturity, his mother told Newsweek for its 1986 profile.

Princeton, Harvard
He received a bachelor’s degree in 1949 from Princeton University and a master’s degree in political economy and government from Harvard University in 1951. In 1951-1952, as a student at the London School of Economics, he toured Europe at the expense of his planned Ph.D. thesis, which never got done, Joseph B. Treaster wrote in “Paul Volcker: The Making of a Financial Legend,” his 2011 book.

Volcker’s career as an economist began in 1952, when he took a job at the Federal Reserve Bank of New York. He left five years later for Chase Manhattan Bank, where he worked closely with David Rockefeller, then the vice chairman. In 1962, Volcker took his first job in Washington, as director of the Treasury Department’s Office of Financial Analysis during the administration of President John F. Kennedy. He served as deputy undersecretary of monetary affairs under Lyndon Johnson, where he witnessed the president’s attempt to prevent then-Fed Chairman William McChesney Martin from raising interest rates. In 1965 Volcker returned to Chase.

He left Chase for Washington for a second time in 1969, this time to be Treasury’s undersecretary for monetary affairs in the Nixon administration. In that role, he helped craft a new international monetary framework to replace the fixed exchange rates and gold standard of the Bretton Woods system, which had been in place from 1944 until Nixon ended it in 1971.

Inflation Warrior
As president of the New York Fed from 1975 to 1979, Volcker became the loudest voice on the Federal Open Market Committee advocating monetary restraint and high interest rates -- a full-fledged inflation warrior. “Sometimes we still hear the argument that in time we can learn to live with inflation,” he said in a 1978 speech. “But experience suggests the contrary -- that this powerful economy of ours will simply not work smoothly or at anything like maximum efficiency or output when there is pervasive uncertainty about the price level.”

President Jimmy Carter appointed Volcker as Fed chief in 1979, succeeding G. William Miller, who became Treasury secretary. Miller had been criticized for being insufficiently focused on fighting inflation. During his 17 months as Fed chairman, inflation had risen to 11.8% from 6.6%.

“The challenge was very clear when I was there: you’ve got an inflation problem and it was getting out of hand,” Volcker said in a 2006 interview. “And the country knew that something was the matter. There was unhappiness with the economy. That is a situation in which you can act.”

Volcker announced what became known as his “Saturday Night Special” on Oct. 6, 1979: a series of measures intended to squeeze inflation. The moves began with a 1 percentage point increase in the rate Fed banks charge financial institutions, to 12%. But the most dramatic was the Fed’s shift to focusing on limiting money supply growth--even if it meant large jumps in interest rates. Which in the end it did, as interest rates climbed as high as 20%.