Donahue sees the latest tangle over money funds as part of a long-running war the industry has fought with the Fed and the SEC.
"It was rather like they were standing outside the delivery room when these things were born trying to club them," he said at an investor conference in June.
'POW Camp'
Volcker, in a September 2011 speech, spoke in favor of tougher rules.
"The time has clearly come to harness money-market funds," he said. Volcker told the Financial Crisis Inquiry Commission in 2010 that most of the cash in money funds "should be with the banks" because they are more tightly regulated.
Donahue told his staff to prepare for more confrontations, he said in the interview.
"We are in a POW camp behind enemy lines, trying to survive," Donahue said. "I assume the battle continues. We will defend money funds come what may."