Inner City Press -- Investigative Reporting From the Inner City to Wall Street to the United Nations

Fed Seat Slated for Ex-Carlyle Hedge Funder Powell, Naked Fox in Henhouse?

By Matthew R. Lee

SOUTH BRONX, December 28, updated Jan 1 -- For an open seat on the Federal Reserve Board, a hedge fund insider from the Carlyle Group, Jay Powell, is reportedly being nominated by President Barack Obama.

  Beyond the obvious overtones of a fox guarding the chicken house, what in fact was learned from the global financial meltdown?

  The Federal Reserve Board governors, beyond setting interest rates, regulate banks and bank holding companies.

   Putting on the Board a person like Powell, who has worked for Bankers Trust / Deutsche Bank (one of the most notorious foreclosers on subprime mortgage loans in the US) and the Carlyle Group (known for brutal investments in Myanmar / Burma (reportedly drilling in Shwe-3 through FDR-Holdings) and the Congo, in tantalum via H.C. Starck in 2007, to say nothing about subprime) is more than a little telling. [See below]

While there is a loud fight about the Consumer Financial Protection Bureau, quietly a fox is proposed to enter the hen house of bank regulation.

  Given the activities of Deutsche Bank and the Carlyle Group, which only today was reported to be planning a new vulture fund targeting banks weakened by the financial turmoil of which the Fed is front-man conductor, what conflict of interest safeguards would be in place?

  What will Occupy Wall Street do? Who can still say that the Emperor has no clothes? Watch this site.

Update of Dec. 29, 1 am -- the Director of Global Communications of The Carlyle Group has written to say Carlyle "has never invested capital in Burma / Myanmar or the Congo." To unpack the links above, from Amnesty International's Business & Human Rights site:

Drilling for the Burmese Junta

Norwatch 07 Jul 2006

The rig “Frontier Duchess” is believed to have carried out the work in the Shwe field in block 1-A and Shwe-3. But Frontier Drilling’s management will not supply details about either the Daewoo assignment or the exact time the operations took place. “The only thing I can say about the case is that the assignment is completed,” Roar Bye, Finance Director in Frontier Drilling, told Norwatch...“We had a drilling assignment for the Korean company Daewoo and have not entered into an agreement with the military regime in Burma..."...Frontier Drilling...is today a wholly owned subsidiary of FDR-Holdings...FDR-Holdings is consequently controlled by private American funds. These funds include Carlyle/Riverstone – that is, The Carlyle Group of Washington, D.C. (Carlyle), and Riverstone Holdings LLC of New York, N.Y. – and the New York-based finance and investment bank Credit Suisse First Boston (CSFB)..

And

"Tantalum is extracted from an ore called coltan, which is primarily found in Central Africa, particularly in the Democratic Republic of the Congo (DRC). The company H.C. Starck which was sold to Advent International and the Carlyle Group in February 2007 by Bayer was involved in this trade significantly."

Watch this site.

Update of Jan 1, 2012, 11:30 am -- The Director of Global Communications of the Carlyle Group directs to a 2011 press release by H.C. Starck that it has been certified as using "only tantalum raw materials from ethical, non-conflict sources."

  While appreciated, we note that this was not in effect when Carlyle decided to buy H.C. Starck, which had been publicly identified by the UN as involved in conflict minerals trade well before Carlyle's purchase. Still, corporate responsibility or at least certification: better late than never.  Watch this site.

#OWS protests in Times Square NYC, BofA, Carlyle at Fed not shown, (c) MRLee

FOIA footnote: meanwhile the Fed continues to make a mockery of the Freedom of Information Act, despite the stated interest of current Governor(s). Here are excerpts from a FOIA appeal Inner City Press has just filed:

ICP has timely appealed denial of December 9 of my FOIA request of September 28, which stated:

This is a request under FOIA for the entirety of ING's request for a non-control determination to own up to 9.9% of Capital One, and all records reflecting any FRS communications regarding the request or ING from January 1, 2011 to the date of your final response to this request. At yesterday's public meeting in Chicago on Capital One - ING DIRECT, Ms. Thro of the Legal Division commented on Inner City Press' testimony, that ICP "can file a FOIA request" for ING's request.

  Despite Ms. Thro's public comment about the ability to file a FOIA request and implication what one would thereby receive the requested documents, on a timely basis, it took two and a half months for the Fed to respond. This constructive denial should be explained and acted on in response to this appeal.

  Worse, among the documents subsequently sent to Inner City Press -- this appeal is timely -- nearly everything is redacted.

  Of the August 15 submission by Sullivan & Cromwel (S&C), the letter requesting confidential treatment is provide: but the entirety of the referenced "Annex A" is withheld.

  The denial letter claimed that "the nature and amount of information being withheld will be evident from the face of the documents being provided." This is not true, and should be reversed, explained and acted on in connection with this appeal.

  From the September 29 S&C cover letter, the area under Mark Menting's signature is blacked out, with the notation "N/R." Since ICP requested "all" documents, it is absurd to call this portion of the submission, whatever it is, "non responsive." If it is the people who the letter is cc-ed to, the Fed has hit a new low that must be reversed, explained and acted on in connection with this appeal.

  Also, the entirely of the September 29 Annex A, including its footnote, is redacted.

  Getting even worse, of the November 18 submissions, even a portion of the request for confidential treatment is redacted, as well as the entire annex.

  Of the November 23 submission, two and a half paragraphs of S&C's letter to Ms. Thro are redacted - each and every redaction is hereby being appealed, including again the absurd blacking out of the area under Mr. Menting's signature.

  From the November 29 submission, the blacked out "N/R" is on a separate page. It is absurd to a claim, in response to the request -- invited by Ms. Thro -- for information related to the any non-control determination that this material, which S&C's letter says is related to the requested non-control determination, is "not responsive." The Fed is increasingly abusing and evading FOIA and this must be not only reversed, but explained and accountability imposed in response to this appeal.

  Watch this site.