by Pam Martens and Russ Martens, Wall St On Parade:
Unlike his three immediate predecessors who chaired the Federal Reserve (Janet Yellen, Ben Bernanke and Alan Greenspan), who all had doctoral degrees in economics, the current Fed Chairman, Jerome Powell, has a law degree from Georgetown University.
Given his legal education, one might have expected that when Fed Chair Powell became aware of the largest trading scandal in the Fed’s history in September of 2021, he would have done his legal due diligence to determine where to refer the matter for investigation.
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While multiple Wall Street watchdogs called for Powell to refer the investigation to the U.S. Department of Justice and the Securities and Exchange Commission – which conduct all legitimate insider trading investigations involving publicly-traded stocks — the Fed instead referred the investigation on October 4, 2021 to the Federal Reserve Board’s own Inspector General, who is appointed by the Chair of the Fed, reports to the Fed Board (including the Chair) and can be fired by a two-thirds vote of the Fed Board.
Mark Bialek, Inspector General, Federal Reserve, Testifying at May 17, 2023 Senate Subcommittee Hearing
The Fed Inspector General to whom the investigation was referred is Mark Bialek, who was appointed to the position by Fed Chair Ben Bernanke in 2011, just four days after an explosive audit of the Fed’s emergency bailout programs during and after the 2008 financial crisis was released by the Government Accountability Office (GAO). That audit showed that the Fed had secretly sluiced more than $16 trillion in cumulative loans to the mega banks on Wall Street and their foreign derivative counterparties from December 2007 to at least July of 2010. A statement from Senator Bernie Sanders’ office at the time included the following:
“The Fed outsourced virtually all of the operations of their emergency lending programs to private contractors like JP Morgan Chase, Morgan Stanley, and Wells Fargo. The same firms also received trillions of dollars in Fed loans at near-zero interest rates. Altogether some two-thirds of the contracts that the Fed awarded to manage its emergency lending programs were no-bid contracts. Morgan Stanley was given the largest no-bid contract worth $108.4 million to help manage the Fed bailout of AIG.”
Not to put too fine a point on it, but JPMorgan also played a key role in causing the financial crisis.
The bank holding companies of JPMorgan Chase, Morgan Stanley and Wells Fargo are supervised by the Federal Reserve, as is every other Wall Street mega bank holding company. At the same time, these mega banks are sitting on committees at the New York Fed to determine “best practices” for their industry. See our report: New York Fed’s Answer to Cartels Rigging Markets – Form Another Cartel.
Equally Orwellian, the Federal Reserve Board outsources the role of bank examiners to its regional Fed Banks, which – wait for it – are, literally, owned by the banks being examined, and who get to elect two-thirds of the Board of Directors of their respective regional Fed Bank. See our report: These Are the Banks that Own the New York Fed and Its Money Button.
This Kafkaesque situation resulted in one such bank examiner at the New York Fed, Carmen Segarra, rushing to the Spy Store in lower Manhattan for a tiny microphone to record the bizarre goings on at the New York Fed when she attempted to write a negative bank examination of Goldman Sachs.
On July 11, 2022, Bialek publicly released a letter clearing Fed Chair Powell and former Vice Chair Richard Clarida of violating any “laws, rules, regulations, or policies” for their part in the trading scandal. Bialek’s statement further indicated that “The investigation of senior Reserve Bank officials is ongoing.”
The senior Reserve Bank officials that Bialek is referring to include Robert Kaplan, former Dallas Fed President, and Eric Rosengren, former Boston Fed President. Both stepped down in September 2021 when news of the trading scandal first broke. See our reports: Robert Kaplan Was Trading Like a Hedge Fund Kingpin for Five Years while President of the Dallas Fed; a Dozen Legal Safeguards Failed to Stop Him and Was Boston Fed President Rosengren Trading with Citigroup’s Money?
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