QUOTE : Our thinking diverged in several areas. I championed, and he distrusted, formal policy frameworks like inflation targeting, which were intended to improve the Fed’s transparency. He had even made jokes about his own strained relationship with transparency. He told a Senate committee in 1987, “Since becoming a central banker, I have learned to mumble with great incoherence. If I seem unduly clear to you, you must have misunderstood what I said.” Also, he did not put much stock in the ability of bank regulation and supervision to keep banks out of trouble. He believed that, so long as banks had enough of their own money at stake, in the form of capital, market forces would deter them from unnecessarily risky lending. And, while I had argued that regulation and supervision should be the first line of defense against asset-price bubbles, he was more inclined to keep hands off and use after-the-fact interest rate cuts to cushion the economic consequences of a burst bubble.