This is a partial transcript from "Your World with Neil Cavuto," June 23, 2004, that was edited for clarity.

NEIL CAVUTO, HOST: Joining me now is Paul Volcker. Mr. Volcker, of course, the former chairman of the Federal Reserve and head of the independent inquiry committee into the U.N. Oil for Food (search) Program.

Also joining us is Joe Treaster. Joe is the author of "The Making of a Financial Legend." He takes a look at the life of Paul Volcker.

Welcome to both of you.


CAVUTO: Mr. Chairman, good to see you. Boy, you're right in the middle of this whole crisis. And that's the question, it always comes down to, do you have the power to do what you got to do?

PAUL VOLCKER, OIL FOR FOOD INQUIRY CHAIRMAN: Well, we've sure got more power than anybody else has. We have access, full access to the United Nations. The Security Council (search) has passed a resolution calling upon the cooperation of all member states. We hope they respect that request.

I think we have the staff. We have a senior of staff in place that will be unmatched. I say that without qualification, unmatched by anybody else that think they're going to be able to do some investigation. I think there's some danger of too many cooks in this particular broth. I would like to think that we're going to do the investigation and we're going to do it right.

CAVUTO: So what do you think of some of these U.S. entities, including the district of New York and some of these others, Congressman Shays, who seem to be interfering?

VOLCKER: People love to get in the act. But, you know, it's important to do this investigation right and have all the facts in front of us, as much as we can get it, not jump out with little leaks here and there which may prejudice the case, may even prejudice the criminal case down the road.

There are some legitimate interests in the participation of American companies. That's fair game. But that's only a small part of this investigation.

CAVUTO: Chairman, do you have subpoena power?

VOLCKER: No. We've got something better than that in some cases. We've got access to the U.N., where a lot of the accusations center. But I hope we get the cooperation of member states.

CAVUTO: But that's the big bugaboo, right? I mean, how do you know...

VOLCKER: Well, that's what people say.

CAVUTO: Right.

VOLCKER: But, you know, having subpoena power isn't the answer to everything. You've got to have not only the subpoena, you've got to have people to answer the questions.

CAVUTO: You're really like an independent prosecutor here?

VOLCKER: We are an independent...

CAVUTO: And from an organization that doesn't have a representation for being forthcoming.

VOLCKER: Well, that may be true, but we have access to all this information that people talk about subpoenaing so and so, and so and so.


VOLCKER: Some of those are clients of the U.N. And we have access to all their information. And we have it I think at least as completely as you'll get from a subpoena.

CAVUTO: All right. Well, if there's any guy who can get to the bottom of something, Joe Treaster, you should know. You've written about Paul Volcker.

People forget that Paul Volcker was the guy who, in the middle of the Carter presidency, 1979, we're dealing with runaway inflation, an economy that was a mess, he inherited a big mess.

TREASTER: A very tough time.

CAVUTO: And everyone focuses on Alan Greenspan today, but he had a cake walk compared to this guy.

TREASTER: He came in at a very tough time. Inflation was really going wild. And he's told me, and you'll see in the book, that there was real concern about really unsettling the whole country, making a real long-term mess.

He felt committed to raising interest rates, to getting that under control. The country went into a very severe recession. He became a very unpopular man.

CAVUTO: Oh, I can remember. Very unpopular.

VOLCKER: I had a certain amount of support, too. He probably exaggerates here.


CAVUTO: But you were really hated for a while, right? You had to aggressively raise interest rates, which you did.  There's nothing gradualistic about you?

VOLCKER: No, but there was a lot of recognition in the country that something needed to be done. I agree, there was nothing gradualistic about it. We wanted to get it done.

CAVUTO: Yes. Do you think Jimmy Carter (UNINTELLIGIBLE) the day that he picked you?

VOLCKER: Well, I've asked him that. He told me the other day — I happened to talk to him. He said I was the best appointment he made.

CAVUTO: Even though he knew that — even though you had to provide this necessary medicine, you doomed his reelection.

VOLCKER: Well, I don't think — I once asked about that and he said there were a few other factors involved.

CAVUTO: Yes, well, that's true.

VOLCKER: Don't forget about the Iranian hostages.


CAVUTO: That's true, absolutely. But you didn't help matters, I mean, right?

VOLCKER: Well, in the very short run, I might have added a vote or two on the other side. But I think...

CAVUTO: But he's not bitter or angry with you?

VOLCKER: Well, not at this point, certainly not.

TREASTER: You know, in sticking to his guns the way he did, even — here was a man who had appointed Paul Volcker to the job, Jimmy Carter. He was trying to get reelected. Paul Volcker, by all accounts, stuck with what he had to do, and the economy came out much the better for it. It was tough on Jimmy Carter, but it all led to his reputation for integrity, which I think led to the...

CAVUTO: Joe, I agree with you. You know, when people ask, especially younger business journalists coming up and down, they all say, Alan Greenspan, a phenomenal Federal Reserve Chairman. And I don't mean this just to blow smoke in his face here that the greatest Federal Reserve chairman is actually sitting with us right now. And this guy today, Alan Greenspan, kind of inherited a lot of that inflation vigilantism from Paul Volcker.

VOLCKER: Give Jimmy Carter some credit. He went through this period. It was a very tough period; interest rates were very high. The economy had been in a brief recession, then was recovering by the time the election came along.

But, you know, he sat there and took it. He didn't...

CAVUTO: Well, he had no choice.

VOLCKER: Well, he may have had no choice, but...

CAVUTO: I mentioned the Alan Greenspan thing.

VOLCKER: ... he could have done a lot of complaining. And he didn't.

CAVUTO: Right. Mr. Volcker, I mentioned the Alan Greenspan thing. Does it bug you today that I guess he's been in there since 1987...

VOLCKER: A long time.

CAVUTO: ... you served eight years, that's it. You were up and you did not want to serve longer. What do you think of the fact that he keeps serving and serving and serving?

VOLCKER: Well, he's got the energy that I don't have, I guess. He's older than I am.


CAVUTO: Settle this for me. Were you fired or did you say I don't want this?

VOLCKER: I said I will not — if asked, I will not serve. No. I didn't — I had promised my wife, among other things — but I thought it was fine to go on anyway — that I would not go for a third term.

CAVUTO: And did Ronald Reagan ever broach the subject, oh, maybe another term?

VOLCKER: His people urged me to stay. Whether their...

CAVUTO: And what did you say?

VOLCKER: ... heart was in it — I said, "No, I'm going to go."

TREASTER: Paul, do you think if — if Reagan himself had made a very, very strong appeal, you might have made a compromise with your wife?

VOLCKER: I think my wife is probably more important than Reagan — Ronald Reagan at that point.

CAVUTO: Your wife was more important than Ronald Reagan?


VOLCKER: I don't say that in any lack of respect for Ronald Reagan.

CAVUTO: But, see, now knowing your responsibilities today, Mr. Volcker, what you have to do, do you think you're the man to challenge the system as you were then and to challenge and knock heads as you were then for this job?

VOLCKER: I'm trying my best. I — you know, for whatever reason, I was picked to head this thing. I thought about it.

I thought the U.N. was in trouble. And I thought somebody better investigate and get to the truth as credibly as possible. They urged me to do it, and for whatever reason, I said OK. And that's what I mean to do.

CAVUTO: Do you think in your heart of hearts people are going to go to jail as a result of this?

VOLCKER: Well, you know, I am not a (UNINTELLIGIBLE) criminal.

CAVUTO: Right.

VOLCKER: But if malfeasance is shown, some of these American contractors were violating the corrupt Foreign Practices Act, that's not my job. But that is the job of the U.S. attorneys and the similar laws elsewhere in the country — elsewhere in other countries.

I might add, you know, people question our independence, I guess. One of the members of the committee, Mark Peat (ph), is a guy, a Swiss lawyer, of all things, who has credited widely with getting the OECD to adopt a convention against foreign corrupt practices against a lot of opposition.

CAVUTO: That's right.

VOLCKER: And here he is a Swiss going after foreign corrupt practices.

CAVUTO: All right. And you're hot on the trail. Good seeing you.

VOLCKER: My pleasure.

CAVUTO: Paul Volcker, former chairman of the Federal Reserve. And the guy who's written extensively about it, Joseph Treaster. The books is "The Making of a Financial Legend."

Good to have both of you.

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