Courtesy of Pam Martens
Fed Chairman Jerome Powell at Press Conference, April 29, 2020
Most Americans likely assume that Jerome Powell, the Chairman of the Federal Reserve, is an economist, like the prior chairs of the Fed over the past 40 years. He’s not. Powell is a former investment banker at the Wall Street firm, Dillon Read; a former partner at the controversial private equity and leveraged buyout firm, the Carlyle Group, which has spent over $1 billion over the past decade lobbying the federal government; and a former lawyer at Davis Polk, a Big Law firm that played a key role advising the government and Treasury in the 2008 Wall Street bailout.
Powell’s background would be strange enough but now consider this. The Vice Chairman for Supervision at the Fed, Randal Quarles, who is in charge of supervising the largest and most dangerous Wall Street bank holding companies in the U.S., has an uncannily similar background to Powell. Quarles also worked previously at Davis Polk and the Carlyle Group. (Powell and Quarles are also good friends, according to Senator Elizabeth Warren.)
Both men were well schooled in leveraged buyouts before coming to the Fed. Both men are now involved in what is effectively levering up $454 billion of taxpayers’ money provided to the Fed under the recently passed CARES Act into a $4.5 trillion leveraged buyout fund of toxic debt from Wall Street banks. After taxpayers’ take the first $454 billion in losses on those purchases, the remainder may be sold off to private investors. If this sounds to you like a set-up on behalf of the one percent, it should.
Powell is a member of that one percent class. According to his 2019 financial disclosure, his net worth could run as high as $55 million. Much of his investments are with Goldman Sachs (a Wall Street bank that is supervised by the Fed) or with BlackRock and its iShares Exchange Traded Funds (ETFs). The government mandated financial disclosures report investment values in a range. The upper value of Powell’s holdings with BlackRock is $11.6 million. The upper range of Powell’s holdings with Goldman Sachs is $16.55 million. The name Goldman Sachs has been shortened to “GS” in the disclosure document.
These would appear to be large conflicts of interest. BlackRock has been selected to manage the unprecedented buying of both investment grade and junk bonds on behalf of the Fed to the tune of approximately $750 billion according to the most recent term sheet from the Fed. Even more conflicted, the Fed will allow BlackRock to buy up its own sinking junk bond ETFs using taxpayer and Fed money. (See here and here.)
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