Every Federal Reserve Board Member Is A Multi-Millionaire

Why it's a problem that a central bank whose job is to organize credit only has creditors in charge.


Welcome to BIG, a newsletter about the politics of monopoly. If you’d like to sign up, you can do so here. Or just read on…

I tried to make this issue a bit shorter than normal, though still packed with peanuts. Here’s what I wrote up:

  • Every Single Member of the Fed Board Is a Millionaire

  • The Federal Trade Commission just did something… good?

  • Trump DOJ Intervening in Foreign Antitrust Cases

  • Apple Relents, Slightly

  • Supermarket Consolidation and Black America

  • Facebook Buys a Mapping Company

  • Big Tech and Trade Agreements

Who Does the Federal Reserve Notice?

There are five Senate-confirmed members of the Federal Reserve. It won’t surprise you to know that all five of them are millionaires. Here’s a list, with links to their financial disclosure forms. (If you have some time to poke around and find anything interesting, let me know or put it in the comments.)

  • The Chair, Jay Powell, 67, is worth between $20 million and $55 million, the richest Fed Chair in history.

  • Randal Quarles, 62, is worth between $24.7 million and $125 million.

  • Richard H. Clarida, 63, is worth between $9 million and $39 million.

  • Michelle Bowman, 49, is worth between $2 million and $11 million.

  • Lael Brainaird, 58, is worth between $3 million and $11 million.

I’ve gone over the financial disclosure forms of all five of these members, and they are all invested in various forms of indexes. Some are invested in private equity funds, Blackrock iShares, or various other assets referencing financial corporations. These strike me as a violation of Section 10, part 5 of the Federal Reserve Act, which says:

No member of the Board of Governors of the Federal Reserve System shall be an officer or director of any bank, banking institution, trust company, or Federal Reserve bank or hold stock in any bank, banking institution, or trust company;

It’s been decades since anyone took conflicts of interest seriously, and I suspect that the Fed has lawyers who can weasel their way into ensuring that Fed board members get to invest in the financial services industry without violating this law. But the statute is there for a reason, which is that the Fed was created in 1913 to take power from Wall Street banks, not to place them on a publicly sanctioned monetary throne. (The original House passed version of the Federal Reserve Act had the Secretary of Agriculture as a Fed Governor, because farmers were the main labor force and borrowing group in the economy back then.)

There’s a more fundamental problem with the arrangement of having an all-millionaire Fed board, aside from any pecuniary gain that might result from all members of the Fed having public positions in which their policy decisions affect their portfolios in similar ways. The Fed is supposed to manage lending and borrowing conditions, but the only people represented among decision-makers are lenders, as opposed to a balance of lenders and borrowers.

America is full of people with credit card debt, student debt, auto debt and medical debt, people who have had trouble getting jobs, or people with bad credit, or entrepreneurs who can’t get loans to build their businesses. Young people. Old people. Middle-aged people, of different races. Yet the Fed board is composed of those with graduate degrees and high net worths, most of whom are in their late 50s or early 60s in terms of age.

In other words, based on their asset ownership and educational credentials alone, no one on the Fed is in touch with the world in which most Americans live. My analysis actually understates the problem, because there are members of the key policy committee at the Fed, known as the Federal Open Markets Committee, that aren’t even appointed by the President and confirmed by the Senate, but are hired by regional bankers to run Fed branches. (I’m not kidding. It was actually a brief flashpoint during the debate over post-financial crisis legislation, whether bankers could continue to hire their own regulators. Barney Frank’s compromise was that they could.)

This lack of representation has serious consequences. In 2017, I reported on how key Fed policymakers mocked unemployed Americans behind closed doors, laughing at and making jokes about them as lazy drug addicts. People didn’t want jobs, according to several officials, one of whom based his commentary on what his wife had told him about her charity work.

These rigid members had to debate Fed board member Sarah Bloom Raskin, who had gone, undercover, to a job fair, to see how employment conditions were on the ground. She was shocked at the poor quality of job offerings, despite what appeared to be a solid economy. Raskin’s undercover attendance at a job fair caused a bit of a stir, because it was a violation of decorum; Fed members simply don’t do such things. Her view, unsurprisingly, was that the Fed should see unemployment as a function of the bad economy, not poor work ethic. I don’t know if anyone on the FOMC has gone to a job fair since Raskin did. But the stack of old millionaires on the board suggests there’s a serious imbalance in terms of representation; there are more private equity barons on the Fed board than people with student debt.

One of the main policy problems in America is that political elites seem to over-prioritize the stock market. It’s not just an inequality problem, but even broader than that. For instance, no one in power really took the Coronavirus seriously until the market started tanking in March. One of the main reasons for this is that policymaking increasingly flows through the Federal Reserve, and the people who run the place have social networks and portfolios that are dependent on how Wall Street is doing, not how the rest of America is.

Anyway, one of my dream pieces of legislation would be a law that reserves half of the slots on the Federal Reserve board for non-millionaires. I know such a law seems gimmicky, but representation really does matter. At least one person on the Fed board should know what it’s like to be harassed by a debt collector, instead of owning financial assets whose value depends on the people doing the harassing.

The FTC and Made in USA: The Federal Trade Commission just issued a proposed rule to bar marketers from falsely claiming that their products are Made in USA. Democratic commissioner Rohit Chopra issued a rousing statement on the importance of the rule. When this rule goes into effect, the FTC can fine anyone making such a false claim. What’s interesting about this rule is that it was done under a Republican FTC, and Republicans tend to shy away from such regulation because of their libertarian thinking. And yet, increasingly, libertarian law and economics people are caught between their assumptions about the virtues of big business and the instincts of the Trump administration. The three Republicans running the FTC, Joe Simons, Noah Philips, and Christine Wilson, are afraid of Trump, who is a protectionist. They have already gotten cross-wise with the Trump administration over their lax enforcement of Made in USA claims. Apparently, that’s not something they want to experience again.

Apple Relents, Slightly: After last week’s no good very bad week for Apple, the corporation made a few slight changes to its business practices. First, Apple allowed Basecamp’s Hey to update its app on the app store, though with some changes. It looks like Apple will sort of let Hey sneak through an informal loophole by offering a basic free email on the app store, along with a paid tier registered through their website. Second, Apple seemed to indicated it will allow users to change defaults for browser and email apps, at least for its iPad. Apple had previously told the Antitrust subcommittee that it would not allow users to control defaults for browsing and email, as these are “operating system apps” like “the Phone, Camera and iMessage, which are designed to work together.” It’s not much, but it’s something.

Trump Antitrust Division Intervening in Foreign Antitrust Cases: DOJ Antitrust Division chief Makan Delrahim continues to embarrass his office. I’ve gone over how Delrahim has been using his position to lobby for Mastercard in England. I just learned the UK court disallowed the DOJ’s participation, which is funny.

More recently, Delrahim had his division submit briefs to enforcers in Austria and Mexico, on cases that as yet remain undisclosed. Hopefully Congress will cut the division’s funding for this nonsense. The amicus brief program is ridiculous and embarrassing. Please start enforcing the law against monopolies in the U.S, Mr. Delrahim. Lord knows we have too many of them.

Supermarket Consolidation and Black America: Just a terrific story by CNN’s Nathaniel Meyersohn on how mergers in the 1980s pulled food stores out of black neighborhoods. Meanwhile, the FDIC has a report out on minority depository institutions showing the number of black banks has declined dramatically because of mergers. It’s not obvious how to pull all the strands together, but black communities have weaker business ecosystems because of disinvestment, fragile finance and monopolies. A few months back I did a story on how black entrepreneurs with access to capital and able to organize content production ran up against Comcast. Systemic business injustice is not just about capital formation, or monopoly, or banking, but a bunch of intertwined deficiencies that amplify one another.

Facebook Buys Swedish Mapping Corporation: The big tech acquisition spree is never ending. Earlier this month, Bain predicted a return of acquisitions in the technology space. Bain partner Adam Haller told CNBC, “We think it’s going to come back in quite a robust fashion — deal count will likely bounce back to historic levels, or above, given the opportunities.” Seems that’s happening. Europeans are fighting with the U.S. over whether to tax digital giants, but if they ever wanted to stop being passive aggressive corporatists, they would just block mergers like this.

Big Tech and Trade: Dave Dayen has a useful article on how Google, Facebook, and Amazon got their legal immunities into the new NAFTA trade agreement. I’m not as pessimistic as he is about what this means, but it’s worth keeping in mind that Section 230 of the Communications Decency Act is now embedded in some of our trading arrangements.

Thanks for reading. Send me tips, stories I’ve missed, or comment by clicking on the title of this newsletter. And if you liked this essay, you can sign up here for more issues of BIG, a newsletter on how to restore fair commerce, innovation and democracy. If you really liked it, read my book, Goliath: The 100-Year War Between Monopoly Power and Democracy.


Matt Stoller

P.S. I got a fun email from prize winning science fiction writer and poet John Philip Johnson, who worked in the insurance industry for twenty years. I can confirm based on my experience in Congress that the insurance industry really really wants Federal regulation.

I followed the link in this one to your non-compete clause column. I wanted to share two points about the insurance industry I was in for 20 years.

The first is, as a sales rep, in the company I was in, you come up with all of your own leads and all of your own customers. But then the contract you sign says that those customer relationships are property of the insurance company, not you. So you build a big book of business, with lots of great and trusted relationships. But if you quit, you lose all that. I quit and went into teaching English.

(Some companies do provide leads, and often they reassign someone else's book of business after they've quit. I suspect most of that business is lost to the company because it was based on the relationship with the original sales rep.)

The second point is that the insurance industry is regulated on a state-by-state basis, and the companies hate that. State insurance departments are relatively personal and actually respond to complaints from the public, and hold the companies responsible on a case-by-case basis. The insurance companies beg to be regulated in Washington. They say it's so they will have a single set of rules, but there's a single set of rules now in the unified state insurance commissioners standards. (They have a name for that which I've forgotten) The real reason insurance companies want Federal regulation is that if Washington takes over, they can get the consumer complaints off their back. Then they can live the unfettered life of mortgage providers. Have you ever had a problem with your mortgage provider making a mistake? I have, and it's a nightmare! You get no help from the government.

Thanks for the work you do! You help bring clarity and honesty where it's needed.

John Philip Johnson

Lincoln Nebraska