As Senate Confirmation Vote Looms, Acting Chair Powell's Trading Violations Still Unresolved
Powell must sell millions in muni bonds, continues to obstruct disclosure of his trade dates & maintains personal stake in DC-area real estate company
*Clarification: Powell’s EA requires him to divest the muni bonds “as soon as practicable”
There are more than 100 homeless encampments in our nation’s capital. Many are located just blocks from the White House, Congress and the headquarters of the powerful, unchecked and unelected Federal Reserve. During the pandemic, Chair Powell repeatedly talked about a camp he passed as some inane justification for the Fed’s unprecedented and controversial monetary interventions for Wall Street, including $10s of trillions in repo loan bailouts and trillions upon trillions more in other bank bailout programs and QE asset purchases. Powell even said he planned to go visit the homeless camp one day (spoiler alert: he never visited).
If you know Jay Powell - whose net worth exceeded $100 million even back in 2017 when Trump nominated him — you know you’ll find the Fed Chair at one of Jeff Bezos’ mansion parties or a private event at the Economic Club of Washington instead of visiting a homeless camp.
Powell has never known personal economic difficulty. His father was a big law lawyer in private practice in Washington, DC. Powell attended an expensive, private all-boys high school called Georgetown Prep, rubbing shoulders with the sons of Senators and business titans. He went on to ivy league Princeton and then Georgetown Law (never even studying economics).
Out of law school, Powell did a stint as a private attorney for a big New York law firm defending Wall Street clients. He later became a private equity vulture at Carlyle Group, where he helped buy up struggling American businesses, lay off workers and then sell off the pieces for a profit. While at Carlyle, Powell also engaged in repeated instances of union busting.
Yes, President Biden and most of the U.S. Senate disturbingly want to reinstall this ultra-wealthy, union-busting Wall Street insider with no formal economic training to oversee American monetary policy. After he greenlit $10s of trillions in repo loan bailouts for Wall Street and foreign bank trading arms. After he helped start the worst inflation crisis in generations. After he presided over the largest insider trading scandal in Fed history. But beyond all that — Powell is so personally financially conflicted that none of his decisions can be trusted.
Powell’s Massive Stock Holdings Pose Major Conflicts, But So Do His Other Investments
As Occupy The Fed Movement has covered at length, Chair Powell is heavily invested in stocks, including $10s of millions in BlackRock (and other Wall Street) proprietary securities products. Indeed, Powell was majorly financially conflicted as to BlackRock when the Fed outrageously awarded the shadow banking behemoth no-bid contracts to run its multi-trillion QE asset purchase program. And what happened? BlackRock outrageously used the Fed’s money to buy up its own products!
As we’ve also covered, Chair Powell is heavily invested in municipal bonds. But he failed to recuse himself when the Fed decided to make an unprecedented foray into purchasing muni bonds, including one of the exact same munis Powell owned himself. When questioned by CBNC’s Steve Liesman, it seems that Powell made up a story about the Office of Government Ethics providing him specific advice that his muni bond holdings posed no conflict. The Fed later confirmed no related documents exist in response to Revolving Door DC’s FOIA request. WTF - we’ve got a Fed Chair who brazenly lies to the media?!
A few months ago, Powell signed a new Ethics Agreement requiring him to divest all of his muni bond holdings listed in Attachment A, which clearly posed a 12 U.S.C. § 208 conflict all along.
The Fed’s “strict” new investment restrictions now expressly prohibit holding individual debt securities and go into effect on May 1. Powell was required to dump the munis “as soon as practicable but not later than 90 days after [his] confirmation.” To date, Powell has not filed a disclosure (Form 278-T) confirming divestment of his millions in muni bonds. Nor has he been confirmed by the Senate. Nor should he be.
Powell Continues to Obstruct Required Disclosure of Most Trade Dates
In many ways, the muni bond conflict is an intentional red herring. Powell has never filed a Form 278-T for ANY of his transactions other than his muni bonds, even though required to do so. Instead, he files an annual Form 278e where most years he reports dozens of previously unreported securities transactions each year.
But worse still he obstructs the disclosure of the majority of his trade dates — date disclosure is expressly required by OGE — and instead hides them behind the word “Multiple.” This is the same tactic that disgraced Dallas Fed Bank President Kaplan used to obstruct disclosure of his shocking day trading. The Fed has repeatedly stonewalled efforts by multiple organizations to obtain information on Kaplan’s trades, but at least Kaplan is no longer employed at the Fed!
And out of the limited sample size of trade dates that Powell did report, there are multiple instances of trading during FOMC trade blackouts (in both 2015 and 2019), i.e. the highly sensitive time period leading up to major policy decisions when Fed officials would easily be able to trade off inside information. And this may very well be the tip of the iceberg for Powell’s FOMC blackout trading. When addressing the scandalous revelation two months ago, the Fed stated that “mistakes” were made on “some transactions during some blackout periods.”
Well, how many and which ones?! The American public deserves to know and would have the ability to find out but for Powell’s obstruction.
Powell’s Real Estate Investments Pose Major Conflicts Given Fed’s “Frankenstein” $2.7+ Trillion Mortgage-Backed Securities Purchases
Chair Powell also holds an overlooked direct, individual stake in a real estate company called BDC Properties, LLC. It’s an affiliate of Bernstein Management Corporation, which “through its investment affiliate, BDC Properties LLC, owns and manages an investment portfolio of 93 properties valued at over $1.6 billion, including 3.5 million square feet of commercial space and over 5,500 apartments in Washington, D.C., Maryland and Virginia.” Powell has up to $1.5 million invested according to his annual disclosures.
Bernstein Management is owned and managed by Josh Bernstein, the son of a longtime DC-area real estate developer. Mr. Bernstein sits on the boards of both the Washington Board of SunTrust Bank and Capital Bancorp - entities regulated by the Federal Reserve. Indeed, SunTrust had a major merger with BB&T approved by the Fed in recent years.
Powell receives tens of thousands every year from his stake in the Bernstein real estate investment company every year, according to his latest annual disclosure. Powell first reported it as a stake in the Rock Creek Opportunity Fund LLC, which apparently merged with BDC Properties in 2020 (Powell thus actively chose to hold this stake during the pandemic).
Powell is not just invested in some nameless, faceless real estate investment trust, like the REITs Boston Fed President Rosengren got into hot water investing in last year before his early “retirement.” This is a select group of roughly 100 accredited investors putting up at least $250,000 each in a company with the express purpose to jointly invest in DC area properties. Do you think Powell wants that investment to succeed? How many of Jay’s close friends or even family are also invested and exerted undue influence on Jay to pump the real estate market?
And on top of this highly questionable, personal & direct investment (and other investments in funds concentrated on real estate), Powell owns at least two DC-area mansions which have increased substantially in value and are worth approximately $10 million dollars, according to Zillow. One is his primary residence. (See “A Forensic Look at Jerome Powell’s “Pants on Fire” Explanation for His $1 Million to $5 Million Stock Sale”). Another is a Chesapeake Bay waterfront estate complete with private pool and boat dock!
So do you think Powell has a vested interest in propping up real estate prices perhaps? Powell was even recognized as one of DC’s top 25 Most Powerful Real Estate Players in 2020! Could all this be why Powell led the Federal Reserve to buy more than $2.7 Trillion in mortgage-backed securities as part of its “Quantitative Easing” asset purchase program? There is zero question that the Fed’s controversial decision to do so has caused skyrocketing housing inflation!
Barron’s recently called the housing market the Fed’s “Frankenstein”! But housing industry experts like Aaron Layman have been sounding alarms for far longer. In May 2021, the chief economist for a large investment firm said point blank: “[T]here's just no argument for the Fed to continue buying MBS.”
But did the Fed listen? Nope. It continued to splash the pot with $40 Billion in MBS purchases per month for almost another year. And it’s STILL buying $10s of Billions in MBS every month because of its inane decision to reinvest principal repayments (and possibly far more than just “reinvestment” given the major discrepancies Occupy The Fed Movement has exposed!).
But Powell would have you believe that he cares about the plight of the plebians and finally intends to combat inflation after blasting America’s poor, working and middle classes for years. He just needs another chance. Well, that’s as trustworthy as his incessant bullshit about “transitory” inflation last year. No, this has all been very intentional and was calculated to enrich himself and folks like him — the richest Americans, particularly the top 1 percent richest.
The U.S. Senate currently plans to confirm Powell as Fed Chair for FOUR MORE YEARS next week. This is our last shot to tell our Senators we know exactly what they’re trying to pull. And we’re FED UP with Fed-Wall Street corruption and trickle-down economics.
So let’s tweet and call our Senators early and often! And tell them the American people demand they vote No on Powell for Fed Chair and #FireJPow.
#OccupyTheFed
I can almost guarantee that they’ll be targeting the working class plebes for demanding higher wages to keep up with inflation. I can’t wait for the propaganda media to start peddling that crap!