Image: Barack Obama, Paul Volcker
Ron Edmonds  /  AP
Paul Volcker, left, is said to have been especially active in the background, counseling President Obama to take a cautious approach on financial regulation.
updated 5/18/2009 3:02:34 PM ET 2009-05-18T19:02:34

The prime office space in the southeast corner of the Treasury building sits vacant four months into the Obama administration. Its ample desk is empty, the walls are bare. Occupants from nearby offices occasionally gather there when in need of a conference table, but otherwise, it's a den of inactivity.

The assigned occupant? Paul Volcker, the towering former chairman of the Federal Reserve and now chairman of President Barack Obama's Economic Recovery Advisory Board. Like Volcker, the 16-member advisory board, announced with fanfare by President Barack Obama in February, has been largely out of public view despite the administration's frenetic attention to the economy.

On Wednesday, its members will make their first public joint appearance since they gathered at the White House on Feb. 6. The focus of the board's presentation is expected to be energy and jobs.

Policy validater
Volcker was one of Obama's early supporters in the presidential campaign, lending some high voltage to a candidate who was working to convince voters that he had the experience to serve in the White House. As the unpaid chairman of the advisory board, Volcker has been within the president's reach, but not in the inner circle that includes Treasury Secretary Timothy Geithner, chief White House economic adviser Lawrence Summers and others who meet with Obama daily in the Oval Office.

Video: Obama explains approach to economic crisis "Walter Mondale used to say that being in the Old Executive Office building was like being in Baltimore," said Paul Light, an expert on White House organization at New York University. "The people who are right down the hall are the ones who have proximity and, therefore, significant opportunities for influence."

But Light said Volcker and other members of the advisory board can serve as "major legitimizers," whose high profile within various political sectors can help validate Obama policy decisions.

Advisory board members and White House officials say the board, and Volcker especially, have been busy behind-the-scenes players. Volcker has been especially active counseling the administration to take a cautious approach on financial regulation, holding several private meetings with Obama at the White House and regular discussions with Obama's economic team.

"I probably talk to Volcker four, five times a week, hearing what is he thinking, keeping him apprised of the situation," said Austan Goolsbee, a member of the White House's Council of Economic Advisers and the advisory board's staff director. If Volcker has an office, White House aides say, it's more likely to be Goolsbee's than his dedicated space at Treasury.

'Take time to think this through'
Geithner and Summers have asked Volcker to brief members of the administration's working group on financial regulation.

"One admonition I would make is we ought to take time to think this through," Volcker said in a talk at Vanderbilt University last month. "There is a temptation to act quickly."

Volcker was traveling and unavailable to comment. But the White House issued a statement from him to The Associated Press.

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"From the start, the president has worked to ensure there are voices outside Washington at the table, and specifically established the President's Economic Recovery Advisory Board for that purpose," he said. "I have been in communication with the president with some frequency, and of course I speak with senior economic advisers more regularly — including Austan Goolsbee, Larry Summers and Tim Geithner."

No doubt, the board got off to a slow start. It needed to meet certain legal requirements and had to develop a charter and bylaws. (It's only equivalent is the President's Foreign Intelligence Advisory Board, created by President Dwight Eisenhower).

Video: Expecting more from President Obama In March the board divided itself into several subgroups — jobs, energy, financial markets and regulation, housing, retirement. In late March, Obama also gave the board the task of coming up with tax change proposals by December.

Officials say they have not been waiting for Wednesday's quarterly meeting to offer suggestions to the administration. Board members say they exchange ideas during teleconferences held weekly or every other week and that Goolsbee serves as a conduit. In some instances, board members have met directly with Obama or Geithner or Summers.

'New things take time'
Members of the financial subgroup, for instance, were called into the Roosevelt Room in the White House in mid-March to discuss financial markets with Obama, Summers and Obama senior adviser Valerie Jarrett. Volcker has been in to see Obama about 10 times and spoken to him on the phone even more frequently, aides say.

"New things take time," said advisory board member Robert Wolf, chairman and CEO of UBS Group Americas and one of the participants in the meeting with Obama in March. "But I think the exchange is starting to work in a much more fluid fashion."

To be sure, the administration did not wait for the board to be fully constituted before attacking the economic crisis. Obama has made big moves on banking, autos and mortgage relief. Geithner proposed new regulations on complex financial instruments last week. Obama's budget, updated last week, is a blueprint of his policy initiatives.

"It was never the intention of this advisory board to be a shadow Treasury," Goolsbee said. "That's not the purpose. The purpose of this thing is to be the economic equivalent of the president's Blackberry."

Added board member William Donaldson, a former Securities and Exchange Commission chairman: "I don't think any of us have hesitated to communicate our views, particularly on things that haven't been decided yet. But if there is stuff in the works that we might disagree with we make our views known. That's part of what the president wanted."

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Video: Obama takes early ownership on economy

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