Admittedly, I’m torn on how to approach a contentious exchange that unfolded on Capitol Hill Tuesday during Jerome Powell’s testimony before the House Financial Services committee.
Long story short, Rep. Katie Porter held up a photograph showing Powell in a tuxedo milling about outside a dinner party at Jeff Bezos’s house. Porter then proceeded to question the Fed chair about his interactions while attending the event.
Her line of inquiry appeared to be inspired by a Forbes article penned by Pedro Nicolaci da Costa, a veteran reporter who you might remember as the man who once quizzed Janet Yellen (to her face) on the Medley Global Advisors leak fiasco. For a variety of reasons, I’m not going to weigh in on that episode, other than to say that, in a somewhat self-congratulatory retrospective published by Business Insider in April of 2017, da Costa seemed to suggest he played no role whatsoever in fueling rumors about why the Wall Street Journal subsequently informed him he would no longer be attending Fed press conferences following the exchange with Yellen. If that is in fact the suggestion, it’s disingenuous, in my opinion.
Getting back to Powell on Tuesday, da Costa’s article referenced by Rep. Porter contains these passages:
I don’t normally care much about what Federal Reserve Chairman Jerome Powell does in his spare time.
This time, however, I feel compelled to offer him some free social advice: Try to avoid black tie parties with major investors that could stand to benefit from your widely-anticipated policy decisions—especially when they include Jared Kushner and Ivanka Trump.
Powell, a wealthy former private equity magnate from Carlyle Group himself, probably felt quite at home at the Bezos gathering.
But for the sake of the institution he leads, the Fed chair should have stayed home and watched a movie.
“Inside Job,” perhaps?
I’ll let readers draw their own conclusions as to whether that constitutes responsible journalism.
If you ask me, it’s simply an effort to piggy-back on the Daily Mail‘s tabloid coverage by injecting some perfunctory Fed “analysis”, spiced with thinly-veiled derision and punctuated with an off-color (not to mention wholly unfunny) joke.
I should mention – for anyone who may be new to these pages – that you’d have a very difficult time finding someone as fiercely protective of central bank independence as I have been. In the same vein, I’ve spilled gallons upon gallons of digital ink lamenting the incestuous relationship between big business, public policy and the extent to which the entire system is (quite literally) rigged against everyday Americans.
Additionally, I agree wholeheartedly with da Costa when he says, in the Forbes article, that “independence is a two-way street” and given Donald Trump’s incessant attacks on the Fed, “this is hardly the time to flout institutional decorum”.
But it’s also “hardly the time” to paint Powell as a villain because he attended a dinner party also attended by Jared and Ivanka. In his exchange with Rep. Porter, Powell specifically said he did not speak to the president’s daughter or son-in-law. As far as Jamie Dimon (who also attended the event), Powell speaks to him all the time anyway, so who cares if they talked at the party?
Asked by the congresswoman “Can you tell me who you did talk to?” Powell responded as follows:
I mainly escorted my son and his brand new wife. I actually introduced them to General Mattis.
He was visibly (and understandably) irritated at that juncture.
“Ok, great”, Porter shot back. “I would just suggest that attendance at this kind of event is inconsistent with what I would otherwise commend you on”, she went on to say.
That, frankly, is absurd. The idea that Jerome Powell was running around Jeff Bezos’s home giving out hot tips on the likely evolution of the Fed’s forward guidance or when the next rate cut is coming or when the Fed plans to make the switch from buying T-bills to buying short coupons, is laughable.
Powell can’t even get through a post-meeting press conference without accidentally saying something to trip up risk assets, and we’re supposed to believe he’s passing inside information to Jeff Bezos between bites of prosciutto-wrapped melon and sips of Veuve Clicquot? Give me a break.
Instead of holding up pictures from the Daily Mail like they’re evidence of Powell’s presence at a crime scene, maybe we should all stay focused on the real problem here, which was on full display in all its orange-tinted glory on Tuesday morning, when Donald Trump tweeted the following during Powell’s remarks:
When Jerome Powell started his testimony today, the Dow was up 125, & heading higher. As he spoke it drifted steadily downward, as usual, and is now at -15. Germany & other countries get paid to borrow money. We are more prime, but Fed Rate is too high, Dollar tough on exports.
— Donald J. Trump (@realDonaldTrump) February 11, 2020
That’s the crime, folks: Autocratic bullying of the central bank by a man who cares nothing for the public good and only for his own re-election odds. Not Jerome Powell eating dinner with other rich people.