FOR IMMEDIATE RELEASE
Contact: Max Moran, moran@therevolvingdoorproject.org
Today, the Revolving Door Project is calling on Congress to immediately investigate all financial transactions made by the entire senior leadership of the Federal Reserve over the past two years.
As the Fed made unprecedented interventions in financial markets to backstop the economy during the COVID-19 crisis, Federal Reserve leaders engaged in or profited from active trading and buyout activity, a Revolving Door Project review of disclosure forms found last week. This included Chair Jerome Powell, Vice Chair Richard Clarida, Vice Chair for Supervision Randal Quarles, and former Federal Reserve Regional Bank Presidents Robert Kaplan and Eric Rosengren.
Revolving Door Project Executive Director Jeff Hauser issued the following statement:
“We need to know more about what the central bank’s highest leaders were up to — especially since two of them come out of a private equity firm which turned the revolving door into a whole business model, as Michael Lewis explained at the time. This investigation will also require subpoenaing financial records from the FOMC leadership’s family members and trustees of their family trusts. These people manage FOMC members’ money, and are plausible potential beneficiaries of illegal insider information. As these records are outside of the scope of the Freedom of Information Act, only Congress is well situated to gather the necessary information. Only if that fact-finding reveals wrongdoing should it become public. We hope Congress and civil society can work together to craft any necessary legislative response.”
“What we know about the rot at Jerome Powell’s Federal Reserve is bad enough. But it would be remarkably myopic to presume that we are seeing more than the tip of the iceberg of corruption at the Federal Reserve. People this brazenly indifferent to ethical restrictions may behave even less scrupulously when they have the expectation of opacity. The public has the right to know whether family members were receiving tips concerning the Federal Reserve’s unprecedented interventions into the economy.”
“Drastic action is necessary, because the prevailing assumption that what is going on at the Fed is a string of harmless, sloppy errors strikes us as wildly unsupported by the facts.”
The Revolving Door Project wrote yesterday that Powell misled CNBC reporters about the state of his own municipal bond investments at a press conference in September.
Notably, Federal Reserve Governor Lael Brainard — the only Democrat on the Federal Open Markets Committee, who is the favored alternative to reappointing Powell as Chair — made no transactions whatsoever in 2020, a Revolving Door Project review found.
Revolving Door Project’s call for oversight comes one day after Senator Elizabeth Warren called on the Securities and Exchange Commission to investigate Federal Reserve officials, including Clarida, for possible insider trading. The investigative news website Wall Street on Parade also called yesterday to “start promptly issuing subpoenas for trading records” at Citigroup and Goldman Sachs, both of which are regulated by the Fed. Wall Street on Parade’s reporting indicates that Citibank may have illegally lent money to Rosengren’s wife to purchase securities, and that Goldman Sachs likely ran a secretive “swap fund” called Exchange Place LP in which Kaplan invested.
Read more of the Revolving Door Project’s writing on Powell and the Federal Reserve here.
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PHOTO CREDIT: “Federal Reserve Building – front with flag – 2012-09-13” by Tim Evanson is licensed under CC BY-SA 2.0