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Volcker: $900 Billion Won't Do the Trick

4:51 P.M.: UDPATED WITH VOLCKER PRICING THE RECOVERY:

Paul Volcker -- the former Fed chairman and current economic adviser to President Obama -- told lawmakers moments ago that even Obama's $900 billion stimulus plan won't turn around the economy, The Post's Neil Irwin reports.

"It's going to take a lot more money to deal with this financial crisis...Make no mistake about it," said Volcker, who stressed that he was not testifying in his official role with the Obama administration.

Earlier today in his Q-and-A with the Senate Banking Committee, Volcker said that government should regulate large hedge funds.

He said that the large, unregulated investment pools for large institutions and wealthy individuals should be required to register when they are over a certain size and to disclose data to regulators if they use borrowed money.

Wall Street is bracing for a raft of new regulations, and tougher enforcement of existing ones.

Moreover, said Volcker, a former Federal Reserve chairman who heads Obama's economic advisory committee, "in those exceptional cases when size, leverage, or other characteristics pose potential systemic concerns, the regulator should be able to establish appropriate standards for capital, liquidity and risk management.

Sen. Richard Shelby (R-Ala.) called for an ambitious investigation by the committee into how the financial crisis happened.

Evoking the 1930s investigations in which the Senate explored the origins of the Great Depression, Shelby said: "There will be a time to discuss what needs to be done. But before we entrust any new or existing regulator with additional responsibilities or authorities, we need to know if, and how, our present regulatory structure failed."

-- Frank Ahrens
The Ticker is Twittering!

By Frank Ahrens  |  February 4, 2009; 4:53 PM ET
Categories:  The Ticker  | Tags: Paul Volcker, hedge funds  
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