Fed Chair Jerome Powell under investigation for dumping millions in stocks amid COVID economic crisis
Donald Trump and Jerome Powell (Screen Capture)

The American Prospect is reporting that Federal Reserve chairman Jerome Powell dumped between $1 million and $5 million in his personal stock before the COVID-19 crisis and the economic crash that began in early 2020.

"Powell's sale of shares from a Vanguard Total Stock Market Index Fund has not been previously reported. This sale occurred right before the Dow Jones Industrial Average suffered a significant drop," said the report.

Powell joined with three other senior Federal Reserve officials who made stock trades during the pandemic as the economy went into freefall. Dallas Fed President Robert Kaplan and Boston Fed President Eric Rosengren took an "early retirement" after disclosing their COVID-19 stock trades. Those trades are now under investigation by the Federal Reserve Inspector General and SEC. Fed Vice Chair Richard Clarida is also coming under fire for questionable stock trades.

"There is no American with more insider knowledge about government policy that drives financial market movements than the chair of the Federal Reserve," explained the Prospect. "And as COVID caseloads, hospitalizations, and deaths spiked last fall, the economy was in a precarious condition. October turned out to be the stock market's worst month since March 2020, when the pandemic began."

Powell dropped the stock sales came amid four meetings with Treasury Secretary Steve Mnuchin and as Donald Trump was preparing to announce the need for a large stimulus package. Instead, it was announced he had COVID and ended up being rushed to Walter Reed with dangerously low oxygen levels.

"Powell also made several other smaller stock and bond trades during 2020, as he has done in previous years. For example, he sold a more nominal amount of the Vanguard equity fund, between $50,000 and $100,000, on September 21, 2020," said the Prospect.

According to the report, Powell was pressing the administration for the package, but Trump instead tweeted he wanted to stop negotiations and would hold the country hostage until after the election. The market immediately lost nearly 600 points.

Powell's sales came after a meeting Sept. 15-16 with the Federal Open Market Committee but before the minutes became public.

"Participants continued to see the uncertainty surrounding the economic outlook as very elevated, with the path of the economy highly dependent on the course of the virus; on how individuals, businesses, and public officials responded to it; and on the effectiveness of public health measures to address it," the Prospect revealed. "Participants cited several downside risks that could threaten the recovery." These included insufficient fiscal stimulus and excessive risk-taking in a very-low-interest-rate environment created by the Fed itself."

The report also cited Powell's net worth somewhere between $20 million and $55 million, according to 2020 financial disclosure statements.

Read the full report at the American Prospect.