Chairman Volcker Keeps His Job

"I couldn 't be more pleased, "says Reagan of the Fed boss

His voice twinkling, Ronald Reagan interrupted his regular Saturday radio address with what he called a "news flash." Said the President: "Some years ago, a favorite movie theme was the crusading reporter—hat on the back of his head, clutching the phone—[who] would yell, 'Give me the city desk, I've got a story that'll crack this town wide open!' I've read that line a few times myself. Well, I'm not wearing a hat or clutching a phone. But I'd Like to make an important announcement. I have, today, asked [Federal Reserve Board] Chairman Paul Volcker to accept reappointment for another term. He's agreed to do so. And I couldn't be more pleased."

With this showman's touch, Reagan told Wall Street what it longed to hear, ending months of debate and speculation about what some consider the second most powerful job in Government. Said Treasury Secretary Donald Regan, until recently a Volcker critic: "He's the right man at the right time. In times like this you don't rock the boat."

Tradition dictates that a Government announcement of deep concern to Wall Street be delayed until the markets have closed, so that stock and bond traders will not stampede. But Reagan's timing may also have been determined by his desire to keep the news from leaking. After making his decision Friday afternoon, he told only a few top advisers. He telephoned Volcker from Camp David Saturday morning, an hour before the radio show, reaching him at his Manhattan apartment, where he spends weekends.

While Volcker was surprised at the timing, he was expecting the nod, and so was Wall Street. The stock market, which not long ago dropped sharply when it seemed that Volcker might be replaced, resumed its happy rise last week. Spurred in part by the growing conviction that the Fed Chairman's job was safe, the Dow Jones industrial average rose 46 points, its second largest weekly gain this year, and reached a record high of 1242.19. Said New York Investment Banker Felix Rohatyn: "Volcker's monetary policy has been criticized by almost everybody and is therefore probably right." Reaction on Capitol Hill and in international banking circles was also very favorable. Only a few demurred. Complained Conservative Monetarist Milton Friedman: "President Reagan has decided to take the course of least political resistance."