Prior to the Fed’s Trading Scandal, an Axios/Ipsos Poll Found 53 Percent of Americans Didn’t Trust the Fed

By Pam Martens and Russ Martens: November 4, 2021 ~

Federal Reserve Chair Jerome Powell

Federal Reserve Chair Jerome Powell

On April 5 of this year, Axios ran this headline: “Poll indicates low trust, poor public perception of the Fed.” Axios had commissioned an Ipsos poll which found that 53 percent of Americans didn’t trust the U.S. central bank, the Federal Reserve. An earlier Axios/Ipsos poll released on February 23 had found that a stunning 60 percent of Americans didn’t trust the Fed.

Both of those polls were taken before the trading scandal at the Fed further damaged its credibility.

Those poll numbers likely explain why Fed Chairman Jerome Powell uses every press conference he conducts as an opportunity to state that the Fed’s priority is to work for the American people. Unfortunately, the facts keep getting in the way of that statement.

Powell held another of his press conferences yesterday and did more harm to the Fed’s credibility by making statements that simply don’t correlate to the facts on the ground. The question came from Politico’s Victoria Guida. The exchange went as follows:

Guida: “Hi Chair Powell. So the Fed recently announced that there’s going to be new conflict of interest rules for investments by Fed officials. And this follows, obviously, the resignation of two regional Fed presidents. And I’m just wondering, do you think that there’s more that you will need to do to rebuild the credibility of the Fed, such as requiring officials to put their assets in blind trusts? And, also, if you could speak to whether you have any concerns that any rules or laws were broken by Fed officials. Thank you.”

Powell: “Let me just say that the ethics system we had in place, had in place for decades, and had, as far as we know, served us well. And then that was no longer the case. And so we had no moment of denial about that. As a group, we stepped in and we took the actions that we took. And within one FOMC cycle, we announced a new set of rules to try to put us back where we need to be, which is we need to have the complete trust of the American people — that we’re working in their interest all the time. Absolutely critical to our work, as it is for any government agency. And I feel like this called that into question. So we reacted. I would characterize it, strongly and forcefully. If there were other things that we could do that were reasonable, we would certainly do them. So you asked about blind trusts, the overall authority for ethics around these issues in the federal government is the Office of Government Ethics, OGE. And they have a long-held position which is not favorable to blind trusts. They do not encourage them. They don’t think they’re effective. They think they’re cumbersome. And they think they’re better ways to get at the things that need to be done. And those are the things that we’re actually doing. So I don’t know that there are any blind trusts for that reason because they’re the regulator. They say this on their website if you look. In terms of laws broken, I asked the Inspector General to look to see whether there were rules broken and whether there were laws broken. And I won’t speculate on that, but that is with the Inspector General now, and, of course, out of my hands.”

Let’s start with Powell’s assessment that the Fed needs “to have the complete trust of the American people.” The fact that 53 percent to 60 percent of Americans didn’t trust the Fed between February and April of this year – before they became aware that Dallas Fed President Robert Kaplan had been allowed to trade like a hedge fund kingpin in S&P 500 futures – means that the Fed had already failed in its mission prior to the trading scandal.

Next, Powell’s statement that “the ethics system we had in place, had in place for decades, and had, as far as we know, served us well” is a complete fabrication of real-world facts.

Mainstream media has reported since at least 2012 on the aggressive stock trading of the prior Dallas Fed President, Richard Fisher. On February 2, 2012, CNN reported that Fisher “holds common stock in at least 43 companies, including more than $500,000 in Google.” Google (Alphabet) is a Big Tech company that responds well to a low-interest rate environment, something the Fed has been artificially achieving since the financial crash of 2008.

On August 28, 2014, Mike Derby of the Wall Street Journal reported that Fisher “owned an array of stocks” and had purchased shares, with combined value of less than $50,000 per company, of Apple, Coach Inc. and Intel Corp., among other companies. He also sold shares, worth less than $50,000 per company, of Bristol-Myers Squibb Co. , Cisco Systems Inc. and Linear Technology Corp.”

In fact, it is the lack of meaningful ethics at the Fed that has led the majority of Americans to conclude that the Fed is a good ole boys club that is controlled by the interests of Wall Street’s mega banks. That lack of ethics extends far beyond the current trading scandal.

Consider this January 2, 2021 Tweet from the highly respected public interest writer, Jesse Eisinger, about the breaking news that the prior Fed Chair, Janet Yellen, had barely stepped down from her post at the Federal Reserve before she started raking in millions of dollars in speaking fees from the very mega banks that the Fed regulates. Eisinger wrote:

“Deeply troubling two-fisted money grab from banks by Janet Yellen. This is corruption, but isn’t called that because it’s so quotidian. Govt service is less about service and has become a deferred compensation plan.”

The Fed’s ethics rules have also not prevented a hornet’s nest of conflicts of interest at the New York Fed.

Sandy Weill, the former Chairman and CEO of the serially-charged Citigroup, served two terms on the Board of the New York Fed, from 2000 to 2006. During that period, Citigroup built up a toxic time bomb of Structured Investment Vehicles (off balance sheet debt) and subprime mortgage exposure that would, from 2008 to 2010, require a taxpayer bailout totaling $45 billion in equity, over $300 billion in asset guarantees, and more than $2.5 trillion cumulatively in below-market interest rate loans from the New York Fed. The Fed supposedly never saw this coming, despite having bank examiners stationed inside Citigroup.

Presiding over the New York Fed during this period was Tim Geithner, President of the New York Fed from 2003 through the crash of 2008. Geithner failed up to become U.S. Treasury Secretary.

Sheila Bair, the former head of the FDIC during the financial crisis, portrays Geithner in her book, Bull By the Horns, as little more than Citigroup’s messenger boy.

The New York Fed’s relationship with JPMorgan Chase is another example of a fatally-flawed ethics model at the Fed.

In early 2012, as JPMorgan Chase was taking on massive risks in exotic derivatives in London, using deposits from its federally-insured bank, its Chairman and CEO, Jamie Dimon, was sitting on the Board of Directors of the New York Fed. As JPMorgan Chase was being investigated by the New York Fed, Jamie Dimon continued to sit on its Board, serving out his two terms which ended at the end of 2012. This scandal became infamously known as the “London Whale” trades and resulted in at least $6.2 billion in losses at the bank.

While all of this was happening at JPMorgan Chase, Bill Dudley was serving as the President of the New York Fed and his wife, Ann Darby, a former Vice President at JPMorgan, was receiving approximately $190,000 per year in deferred compensation from JPMorgan – an amount she was slated to receive until 2021 according to financial disclosure forms.

According to the New York Fed’s web site, its “employees are subject to the same conflict of interest statute that applies to federal government employees (18 U.S.C. Section 208).” Under that statute, a spouse’s conflicts become the conflicts of the employee.

Wall Street On Parade reported in 2012 on how a Barclays’ employee told a Senior Financial Economist at the New York Fed that his bank was not “posting um, an honest LIBOR.” That conversation, denoting one of the biggest cartel frauds in history, occurred in April 2008, and yet, no one at the New York Fed thought it necessary to alert the U.S. Justice Department that one of the benchmark interest rates used to index financial products around the world was being intentionally rigged.

During a 2014 Senate hearing, Senator Jeff Merkley (D-OR) asked New York Fed President Dudley how many names of the individuals who engaged in the tax evasion scam deployed by Credit Suisse were turned over to authorities. Dudley said he didn’t know. Merkley asked how many Americans who created those secret tax evasion accounts with Credit Suisse were prosecuted. Dudley said he didn’t know. Merkley asked how many of the hundreds of Credit Suisse employees that set up these sham accounts were indicted. Dudley said he didn’t know. Merkley said the answer to all of these questions was “none.”

Merkley went on to explain that the Credit Suisse guilty plea to criminal charges came about not because of any advance information provided by the New York Fed or any investigation undertaken by the New York Fed, but because of the work of Senator Carl Levin on the Senate’s Permanent Subcommittee on Investigations. Merkley added: “You’re the regulator; why did it take the U.S. Senate committee to find out those facts.” Dudley responded: “I don’t know the answer to that.”

A clue to why the New York Fed remains willfully blind about fraud is that it is, literally, owned by the mega banks engaging in fraud. When it bails out these banks after their systemic frauds, as it did in 2008, it is effectively monetizing fraud throughout the U.S. financial system.

When the Fed then goes to court against the media for almost three years to prevent Americans from learning the gory details of its $29 trillion bailout, it loses all credible claims to genuinely wanting the trust of the American people.

Following the financial crisis of 2008, it took an amendment by Senator Bernie Sanders to the Dodd-Frank financial reform legislation to have the Government Accountability Office conduct an audit of the Fed’s bailout facilities and publish the details. The media had to take the court case all the way to the U.S. Supreme Court before the Fed’s crony bailouts were fully revealed to the American people.

Something very similar is happening today. Only this time around, mainstream media is censoring the story. (See The Wall Street Journal and New York Times Censor Yet Another Major News Story on the Fed and the Mega Banks It Supervises.)

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