A plaque remaining from the Big Apple Night Club at West 135th Street and Seventh Avenue in Harlem.

Above, a 1934 plaque from the Big Apple Night Club at West 135th Street and Seventh Avenue in Harlem. Discarded as trash in 2006.

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Entry from April 05, 2010
“The only useful thing banks have invented in the last 20 years is the ATM”

Paul Volcker (a former chairman of the Federal Reserve) has said that he’s no fan of fancy financial products (such as the “credit default swap").  In December 2009, Volcker addressed the Wall Street Journal Future of Finance Initiative in the UK, stating:

“The most important financial innovation that I have seen the past 20 years is the automatic teller machine, that really helps people and prevents visits to the bank and it is a real convenience. How many other innovations can you tell me of that have been as important to the individual as the automatic teller machine, which is more of a mechanical innovation than a financial one?”

The statement has been frequently quoted as “The only useful thing banks have invented in the last 20 years is the ATM.” The ATM was older than 20 years in December 2009, so the statement is sometimes given with “25 years” or “30 years.” Volcker’s meaning is that the ATM is an important financial innovation (though a technical one) and not financial chicanery.


Wikipedia: Paul Volcker
Paul Adolph Volcker (born September 5, 1927) is an American economist. He was the Chairman of the Federal Reserve under United States Presidents Jimmy Carter and Ronald Reagan (from August 1979 to August 1987). He is currently chairman of the newly formed Economic Recovery Advisory Board under President Barack Obama.

MarketBeat - The Wall Street Journal
December 8, 2009, 12:32 PM ET
Volcker Praises the ATM, Blasts Finance Execs, Experts
By WSJ London
Former Federal Reserve Chief Paul Volcker isn’t afraid to speak his mind. At The Wall Street Journal’s Future of Finance Initiative he tossed a few broadsides at a group of financial executives and policy makers.

The group had gathered to come up with suggested reforms that would help prevent a future financial calamity. Mr. Volcker’s verdict: “Your response I can only say, is inadequate. You have not come anywhere close.”

Mr. Volcker, who also chairs President Obama’s Economic Recovery Advisory Board, had a few other choice comments. Among them:

“I wish somebody would give me some shred of evidence linking financial innovation with a benefit to the economy.”

Mr. Volcker’s favorite financial innovation of the past 25 years? The ATM. “It really helps people, it’s useful.”

Dealbreaker
08 Dec 2009 at 2:40 PM/ Posted in: News
Paul Volcker’s Favorite Financial Innovation Of The Last 25 Years Is The ATM
By Bess Levin
“It really helps people, it’s useful,” the former Federal Reserve Chief said today. So there’s that.

New York (NY) Post
The only thing useful banks have invented in 20 years is the ATM’
Paul Volcker gets worked up

By PAUL VOLKER
Posted: 1:27 AM, December 13, 2009
“You are not going to be very happy with my response,” PAUL VOLCKER began, when he was asked to address ideas for reforming financial services at last week’s Wall Street Journal Future of Finance Initiative in the UK. Volcker, who was chairman of the Federal Reserve under Presidents Carter and Reagan and serves on the Economic Recovery Advisory Board of President Obama (right), said that financial instruments like Credit Default Swaps provide no benefit to the overall economy. An excerpt:
(...)
I was listening to this and I found myself sitting next to one of the inventors of financial engineering who I did not know, but I knew who he was and that he had won a Nobel Prize, and I nudged him and asked what all the financial engineering does for the economy and what it does for productivity. Much to my surprise he leaned over and whispered in my ear that it does nothing. I asked him what it did do and he said that it moves around the rents in the financial system and besides that it was a lot of intellectual fun.
(...)
The most important financial innovation that I have seen the past 20 years is the automatic teller machine, that really helps people and prevents visits to the bank and it is a real convenience. How many other innovations can you tell me of that have been as important to the individual as the automatic teller machine, which is more of a mechanical innovation than a financial one?

Mother Jones
Cause of the economic meltdown.
Submitted by Russell Rankin (not verified) on Mon Jan. 18, 2010 9:17 PM PST.
(...)
I agree with Paul Volcker. The only good economic innovation in the last thirty years is the ATM machine.

Naked Capitalism
Thursday, March 25, 2010
Quelle Surprise! Financial “Innovation” Benefits Innovators, Leads to Product Collapses
Economists are often in the “it works in practice, but does it work in theory?” mode, but here we see a case where some are grappling with why some of their prized notions pre-crisis came a cropper.
(...)
COMMENTS
fresno dan says:
March 25, 2010 at 7:11 am
“The principals are a set of rational, competitive investors and the agents are a set of similarly imbued fund managers.”

My alternative theory is neither is rational. And I agree with Volker that the only real innovation in the last 20 years is the ATM.

Posted by {name}
New York CityBanking/Finance/Insurance • (0) Comments • Monday, April 05, 2010 • Permalink