Fed Chair Powell Claims Trades Made During FOMC Trading Blackouts Were 'Mistakes'

According to the Fed, Powell's unnamed "adviser mistakenly made some transactions during some blackout periods"

It’s been quite a week. For some months, we simply researched and mused on the Fed’s corrupt and reckless monetary policy over Twitter. Last Sunday, we published a detailed Substack article on Fed Chair Powell’s glaring financial conflicts and newly discovered trading violations.

The response was overwhelming. Our first article has garnered over 100,000 views, coming from Twitter, Reddit, Google, Y Combinator and direct links. And our tweet thread hit more than 1.25 million impressions, 6,700 likes, and 3,500 retweets.

As relative unknowns, we feel honored, humbled and inspired. It always takes a bit for Fed-Wall Street corruption to be exposed each cycle (mostly because the Fed lacks real transparency or accountability). And now the ill effects of the Fed’s radical, over-the-top policy to inflate the assets of the wealthiest Americans and profit of national crisis has sparked the worst inflationary crisis in generations.

It was a lonely perch for folks like Dr. Mohamed El-Erian, Sven Henrich and even Larry Summers who tried to warn about over-doing it before it was too late. We came close to giving up several times. We didn’t throw in the towel because we care too much about our fellow Americans who are being irreparably harmed by the Fed.

How We Scooped the Wall Street Journal and Every Other Corporate Media Outlet on Fedgate’s Latest Scandal

Since last September, it seems like the press pulls every punch when it comes to Fed Chair Powell’s role in the sprawling Fed insider trading scandal (which is truly deserving of the moniker #Fedgate). So, we started digging. And reading and learning from the work of others. And pouring over every public OGE filing we could get our hands on. And then we discovered something remarkable.

Fed Chair Powell’s public disclosures were riddled with the word ‘Multiple’ — instead of listing every trade date as required — just like ex-Dallas Fed President Kaplan pulled for years before resigning in disgrace last year. That’s odd. Then we focused on the few dates Powell actually disclosed and found clusters of transactions on FOMC meeting dates in 2015 and 2019. And we were SHOCKED.

When the Fed scandal broke, their PR department touted the FOMC financial trading blackout as a shining exemplar of strict restrictions at the Fed, where even the appearance of a conflict is supposedly verboten. So how does an experienced investment bank lawyer with one the top government positions “serving the public” let such a serious breach happen multiple times? And how does no one even know about it?

We were dismayed to find zero news outlets reporting on Powell’s illicit blackout trading. Not the Wall Street Journal’s Michael Derby, who broke the Fed Scandal open by pouring through Kaplan’s disclosures. Not the New York Times’ Jeanna Smialek who, with help from Senator Warren, brought down Fed Vice Chair Richard Clarida (one of the most influential voices at the Fed). Not even CNBC’s Steve Liesman, who first uncovered Powell’s own muni bond conflict and caught Powell in what now appears to be a disturbing lie about non-existent OGE advice.

We hope some mainstream journalists finally break their silence and muster the ink to cover this bombshell. The U.S. Senate may vote on Powell’s confirmation as soon as Feb. 15. Do you think it’s newsworthy the Fed Chair - who oversees U.S. monetary policy and has unfettered access to the most sensitive of non-public financial information — has confirmed trading during restricted blackouts? The public deserves to know. And in our humble opinions, it’s far more consequential than recent coverage of the Fed scandal that entirely omits it.

The Fed’s Wholly Inadequate Explanation of Powell’s Violations

Thankfully there are still some financial journalists who have the integrity and courage to cover stories about powerful government leaders like Powell, even if it draws the ire of “elites” in DC and New York. In particular, Wall Street on Parade has an excellent writeup about it (“Activist Group Reports that Fed Chair Powell Traded During FOMC Restricted Periods: We Fact-Checked It and It’s True”). They also reached out directly to the Fed for comment, and the Fed provided a statement (which we’re positive they never would have done for us!) The Fed’s Hail Mary spin to explain things boils down to WHOOPSIE — they claim Powell’s “advisor mistakenly made some transactions during some blackout periods.” The Wall Street on Parade piece expertly dismantles the “many, serious flaws” in the Fed’s response far better than we could, and we strongly encourage everyone to read it there.

We don’t have a lot to add, but we’ll share a few other thoughts. First and foremost, we have absolutely no way of knowing the full extent of Powell’s trading during FOMC blackout periods. Why? Because Powell himself failed to comply with clear requirements. The Fed suggests it was just “some transactions during some blackout periods,” but the majority of Powell’s transactions are hidden behind entries that say ‘Multiple’ instead of providing dates. Yet, the Office of Government Ethics (OGE) expressly requires filers “provide the month, day, and year of the transaction.”

The Fed wants us to buy that these trading violations were made by some unnamed “adviser” who manages Powell’s finances and just made some innocent mistakes. Even if true, as pointed out by Wall Street on Parade, Powell retains ultimate responsibility for his transactions and filings. And if Powell has BlackRock CEO Larry Fink on speed dial, we can only imagine how often he calls his personal financial adviser. Moreover, there are numerous transactions listed in Powell’s filings that obstruct date disclosure and are NOT marked as part of the Powell family trusts (indicated by “See Endnote”).

This is evident on Powell’s latest disclosures below and his filings for prior years too. How do we know all those trades did not occur during blackout periods? We don’t.

These are some egregious violations. A typical government official could expect to be thoroughly investigated, fired and potentially prosecuted over something like this. But Powell seems to think he’s above the law and entitled to another term in the enormously powerful role of Fed Chair despite all this. Well, we were raised to believe that kind of unequal application of justice was more likely to be found in say Communist Russia or China, not in the land of liberty and justice for all.

Powell’s Transgressions Are Outrageous, Inexcusable and Should Disqualify Him from Serving in Public Office

By far, the most common reaction to the news about Powell’s blackout trading has been outrage — and rightly so.

Some folks also noted they were not surprised given the Fed’s history of corruption and bemoaned the fact that nothing is being done to address it, including an interesting writeup from Investment Research Dynamics.

Another common reaction to all this is one of disbelief. And we can sympathize. It is hard to believe when a high-level government official who we entrust with awesome power over our lives and who is supposed to be serving the public interest so gravely betrays our trust. And while we carefully source our articles, we don’t have the name recognition of a major news outlet, which many Americans rely on to tell them what’s real and what’s fake.

Indeed, some brushed this off like this wasn’t news at all. And that really concerns us. There seems to be a concerted effort here by the government/Fed, the media and other influential voices to downplay or hide the truth about this scandal from the public.

To be frank, we wish there was no need for an Occupy The Fed Movement. We don’t relish doing this or personally benefit from it. But we can’t just swallow our tongues any longer when corporate media is doing so little to hold the Fed accountable and expose systemic Fed corruption. Especially when the American middle and working class are gravely harmed by such callous Fed policy, designed to enrich Wall Street and the wealthy under the guise of pandemic response.

We didn’t need Dow 36,000 and Nasdaq 16,000 to get us through the pandemic. We didn’t need tens of trillions in bailout loans and $120 billion in QE per month on top of 0% interest and zero reserve ratios for megabanks (STILL!) to get us through the pandemic. We didn’t need Wall Street behemoths like BlackRock and Blackstone buying up every affordable single-family home on the market in America (which will sit vacant or get dumped when the bubble pops) to get through the pandemic. No, none of this was in the public interest.

Powell didn’t let a crisis go to waste to enrich himself and his wealthy cronies. When they’re being honest, billionaires are the first to admit the Fed’s real goal — to transfer wealth from the middle and working class to the rich. The Fed has succeeded in consolidating more wealth in the hands of the top 1% of Americans in than the entire American middle class. And Wall Street just awarded themselves the biggest bonuses ever — estimated to be 35% higher than the prior record!

The rest of us have to suffer through yet another Fed-fueled boom-bust, negative real wages and skyrocketing inflation that’s the highest in generations. No, none of this is in the public interest. No, this is not the stuff of heroes, as Powell fancies himself or as corporate media desperately tries to gaslight us.

Powell and the Fed are unmoved by the harms they’re inflicting on 99% of their fellow Americans. The Fed is the furthest “behind the curve” it’s ever been — holding rates near 0% for banks and the wealthy — while mortgage and loan rates for most Americans spike way higher and put the American dream further out of reach. The Fed just pumped more than $70 billion into mortgage-backed securities last month alone, while Americans struggle with the worst housing affordability in history. And now the Consumer Price Index (CPI or #CPLie due to its ridiculous manipulation lower) just hit the highest it’s been in 40 years at 7.5% (but in reality, it’s as bad as the 1970s or worse).

Ben Bernanke said the Fed could “raise interest rates in 15 minutes” if it wanted. Great, shut up and do it already! Enough with the inane lip service to the inflation crisis and the plights of people you’re supposed to serve! The fact is, it’s no emergency for Powell and his family (who are estimated to have more than $100 million) or their ultra-rich cronies who can now afford DOUBLE the number of superyachts they could before the pandemic. Having your landlord jack up rent by 50% is not an emergency they’ll ever face. Nor is having your savings devalued faster than you can find an affordable home or car. Nor is having to decide between filling your gas tank or filling your stomach. But making sure stocks are inflated enough the rich can afford all the bells and whistles on their newest superyacht? All hands on deck!

We have some other stories percolating, but we wanted to take this chance to reflect and keep the focus on Powell, who has irreparably betrayed the public’s trust and is not fit for public office. Ironically, if Powell just stepped down at the end of his term, he might have been able to keep this under wraps. Now the demand for accountability and the call to end the Fed entirely is growing louder. Perhaps four more years with Powell at the helm will help wake people up enough to #EndTheFed and rid our country of its “greatest driver of wealth inequality in history” once and for all.

We can also VOTE out every single U.S. Senator who votes for Powell as Fed Chair. There is no reasonable excuse to support him. To suggest we must somehow accept corruption and incompetence because Powell is the only person who can run the Fed and has bipartisan support is utter nonsense. We don’t have to look hard to find other more qualified candidates than Powell who have not been implicated in the scandal, such as Raphael Bostic at the Atlanta Fed (who has a doctorate in economics from Stanford University) or James Bullard at the St. Louis Fed (who has a doctorate in economics from Indiana University).

You (Yes, YOU!) can make a difference right now. Please tweet, write and call your U.S. Senators (and ask your friends to do the same). Let’s make sure all our elected representatives know their constituents won’t stand for government corruption and call on them to do the right thing and vote NO on Powell as Fed Chair!