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This Federal Agency Is Investigating Why the Fed Is Bailing Out Wall Street Again

Courtesy of Pam Martens

Jelena McWilliams, Chair of the FDIC

Jelena McWilliams, Chair of the FDIC

Jelena McWilliams is a Trump appointee who currently serves as the Chairwoman of the Federal Deposit Insurance Corporation (FDIC), the federal agency responsible for insuring the deposits of commercial banks and savings associations in the United States. McWilliams also knows her way around Wall Street. Her resume at the FDIC states that “Before entering public service, she practiced corporate and securities law at Morrison & Foerster LLP in Palo Alto, California, and Hogan & Hartson LLP (now Hogan Lovells LLP) in Washington, D.C.” As a corporate lawyer, McWilliams “represented publicly and privately-held companies in mergers and acquisitions, securities offerings, strategic business ventures, venture capital investments, and general corporate matters.”

McWilliams put her Wall Street savvy to work from 2012 to 2017 in the positions of deputy staff director, chief counsel and senior counsel to the U.S. Senate Banking Committee where she assisted former Republican Committee Chairs Richard Shelby and Mike Crapo in their efforts to deregulate Wall Street banks by loosening or repealing parts of the Dodd-Frank financial reform legislation that was passed under the Obama administration in 2010. (See her full career bio below.)

McWilliams was in New York this week to give a speech at a commercial real estate conference. Andrea Riquier, a reporter for the Dow Jones news organization, MarketWatch, was able to snag an interview with her on a range of subjects. On the matter of why the Federal Reserve is now infusing hundreds of billions of dollars a week into Wall Street securities firms, the first time it has done so through the repo market since the financial crisis, the exchange went like this:

Riquier: “Can we talk about the recent flareup in the repo market? What happened? I have a colleague who says when something like that happens, the market is trying to tell us something.

McWilliams: “Yes. (Laughs.) The irony of this is, I have met with large bank CEOs that are in the market and are sitting on, frankly, a trillion plus dollars of cash. I’m wondering why exactly, why didn’t they go into the marketplace, recognizing there was a shortfall and they could have made money. So we are meeting now with their treasurers and chief risk officers to understand exactly the reasons why. If it’s regulations, we need to make sure we understand. If they are holding on to money —cash — and U.S. Treasurys because our rules require them to, and that’s causing liquidity not to be in the marketplace, we should fix that. Because you want a liquid marketplace and it’s supposed to work seamlessly, right? We’re not sure actually that’s the largest component of what happened but once we’re done talking to all the large banks we’ll have a better sense.”

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