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**OCTOBER 18, 2021**

Kuttner on TAP

Jay Powell's Propagandists

His campaign to be reappointed chair is abetted by Fed spin and a tame
and collusive press.

This morning, we broke the story

that the Fed's insider trading scandal extended to the Fed chair, Jay
Powell, himself, noting why the timing of his multimillion-dollar
October 1, 2020, stock sale looked highly suspect.

There's more to the backstory. Part of it is misrepresentation and
cover-ups by Powell loyalists at the Fed, compounded by some of their
allies in the press.

For instance, while Powell's big trade of last October had not been
previously reported, CNBC had noticed from disclosure documents that
Powell owned and traded municipal bonds
,
at a time when the Fed was supporting that market. Fed officials assured
CNBC that Powell had no personal control over those holdings. That
turned out to be a lie.

The updated CNBC piece included a rare editor's note that said: "This
story has been updated to reflect new information. Fed Chair Powell
owned the municipal bonds in question in a joint account over which he
had control. Due to incorrect information provided by the Federal
Reserve, CNBC reported initially that Powell owned the munis in a family
trust over which he had no control."

The Fed's spin all along has been to insist that these trades were no
big deal. In today's **Wall Street Journal** piece
,
which mentions Powell's October 1 stock sale in passing, the writer
takes at face value the Fed's assurance that this sale was totally
consistent with Fed ethics rules: "A Fed representative said Mr.
Powell's financial transactions squared with central bank rules and
were signed off on by government ethics officers."

But of course, the

**Journal**'s writer, Michael S. Derby, in giving Powell an alibi,
gets the implication backwards. The obvious point is that "government
ethics officers" were not even enforcing the Fed's own far too weak
code of ethics, as the

**Prospect** story pointed out.

Pro-Powell spin has become a habit for the

**Journal**. A Friday

**Journal** piece
,
by Nick Timiraos, actually tried to use the trading scandal to burn
Powell rival Lael Brainard, a Fed governor who has made no trades. The
Timiraos piece quotes three sources friendly to Powell contending that
"if this implicates Powell, it also implicates Brainard, too." Say what?

The rationale is that Brainard is the Fed governor with oversight for
regional Fed banks. But as this

**Prospect** piece

pointed out, Powell ultimately is the controlling officer: "The Federal
Reserve Act specifies in Section 10.2 that 'the chairman of the Board,
subject to its supervision, shall be its active executive officer.'"

The document showing Powell's October 1 stock sale is public record.
In the course of researching my piece, I quickly became aware that other
reporters from mainstream media were sniffing around this story. The
fact that it took the

**Prospect** to break it speaks volumes about the cozy collusion between
Powell and the beat reporters who regularly cover him.

~ ROBERT KUTTNER

Follow Robert Kuttner on Twitter

Robert Kuttner's latest book is
The Stakes: 2020 and the Survival of American Democracy
.

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Jerome Powell Sold More Than a Million Dollars of Stock as the Market
Was Tanking

Disclosure documents reveal that the spectacle of Fed officials
personally trading stocks extended to the chair himself. BY ROBERT
KUTTNER

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