“We must not shrink away from change but accept the need for basic financial reform,” said Volcker, currently chairman of President Obama’s Economic Advisory Board, in remarks to the Economic Club of New York.
He said the economy appears to be growing slowly, and that the financial crisis is beginning to seem to some like a “bad dream.”
But the magnitude of the crisis showed that the underlying problems are “more fundamental” and require “broad reform” of the financial system, he warned.
The former Fed chairman said the central bank should play a key role in overseeing the financial system. Among his ideas, he said the Fed should have the power to dismantle big banks that pose a systemic risk to the economy.