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The U.S. Federal Reserve is no stranger to allegations of ethical lapses, as we have reported in “Bankster Bandits Get Richer Playing the Inside Track” (14 Sep 2021) and “Fed’s Bankster Bandits Get Free Ride” (22 Sep 2022).
Last fall, The Wall Street Journal revealed that Robert Kaplan, president of the Federal Reserve Bank of Dallas, made a series of financial transactions while the Fed was crafting policy changes to respond to the COVID War’s economic shutdown, including 24 stock trades that each were worth at least $1 million.
Eric Rosengren, president of the Boston Fed, was also found to have made questionable trades during the period.
After those scandals broke, the Fed said it tightened its internal ethics rules, but that failed to stop questionable trades by Raphael Bostic, president of the Federal Reserve Bank of Atlanta, as we detailed in “Another Fed Bankster Caught violating Financial Disclosure Rules” (18 Oct 2022).
Bostic was a client of Morgan Stanley, to which the Fed gave the second-largest bailout (after Citigroup), during the Great Recession, amounting to $2.04 trillion. The Fed regulates Morgan Stanley.
Kaplan apparently had maintained a trading relationship with Goldman Sachs, where he’d worked for 22 years before joining the Fed. The central bank also regulates Goldman Sachs.
Also, Citibank gave Rosengren’s wife a margin account. The Fed supervises Citigroup, which owns Citibank.
“Why didn’t the compliance departments [of these megabanks] prohibit the aggressive trading that was done by these officials…when the Fed sat on enormous amounts of insider information?” Pam and Ross Martens asked in a 24 October Wall Street on Parade essay.
Janet Yellen, the current treasury secretary, left her post as Fed chair in February 2018. That month, she signed a contract with a speakers bureau and proceeded to collect $7 million in speaking fees, much of it from the banks she regulated, until president Joe Biden nominated her to helm the treasury department. (See “Yellen Makes $7 Million From ‘The Club’” 5 Jan 2021).
When Biden announced her nomination, Jesse Eisinger, a senior editor at the nonprofit news agency ProPublica, tweeted, “Deeply troubling two-fisted money grab from banks by Janet Yellen. This is corruption, but isn’t called that because it’s so [customary].
“Sure, Yellen might think she can make independent decisions once in office,” he added, “but how arrogant is it to imagine that money corrupts everyone but you?”