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WHITE HOUSE DODGES QUESTION ABOUT YELLEN’S FEES. This will be a newsletter with one quick point. New Treasury Secretary Janet Yellen made a lot of money — $7.2 million, precisely — over the last two years by making speeches at events held by banks and other financial institutions. That is bound to create a conflict of interest — or, as official Washington likes to say, the appearance of a conflict of interest — when Yellen, as Treasury Secretary, deals with all those companies that have written her big checks.
It already has. As it turns out, one of the financial institutions that paid Yellen so handsomely is involved in the GameStop insanity that is roiling the hedge fund world. The reddit-powered runup of GameStop’s stock dealt an enormous blow to Melvin Capital Management, the hedge fund that had hoped to make a big profit off the decline of GameStop stock and instead faced enormous losses when the stock rose. Melvin survived with a $2 billion bailout from another fund, Citadel LLC.
Citadel is one of the institutions that has paid Yellen for speeches. And quite recently, too. Citadel paid Yellen $337,500 in October 2020; $180,000 in December 2019, and $292,500 in October 2019. Together, that is $810,000 in the last 15 months.
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So it is entirely reasonable for reporters to ask the White House 1) What, if anything, is Yellen going to do about the GameStop matter, and 2) Whether Yellen will recuse herself from the issue because of her connections to Citadel. And here is the one quick point: The White House doesn’t want to talk about it.
On Wednesday, a reporter asked White House spokeswoman Jen Psaki if the White House was concerned about Gamestop and whether there have been “any conversations with the SEC about how to proceed?”
“Well, I’m also happy to repeat that we have the first female Treasury Secretary and a team that’s surrounding her,” Psaki answered, as if diversity somehow answered the question. “And, often, questions about market we’ll send to them. But our team is, of course — our economic team, including Secretary Yellen and others, are monitoring the situation.”
Put that down as a non-answer. Then, on Thursday, came a follow-up question. “You did mention, I believe yesterday, that the Treasury Secretary is monitoring the situation and she’s, kind of, on top of it,” the reporter began. “There have been some kind of concerns about her previous engagements with Citadel and speaking fees that she has received from Citadel. Are there any plans to have her recuse herself from advising the president on GameStop and the whole Robinhood situation?”
“Well, just to be clear, what I said was that we have — the Treasury Secretary is now confirmed,” Psaki began. And yes, it is indeed the case that Yellen has been confirmed to her position. “Obviously, we have a broad economic team,” Psaki continued. “The SEC put out a statement yesterday that I referred to. But I don’t think I have anything more for you on it, other than to say, separate from the GameStop issue, the Secretary of Treasury is one of the world-renowned experts on markets, on the economy. It shouldn’t be a surprise to anyone she was paid to give her perspective and advice before she came into office.”
So there’s the (non) answer. The White House doesn’t want to talk about Yellen’s speaking fees and any conflict they might create. The issue is not the size of the fees; anyone who has ever given a speech would love to have someone pay them $300,000 to do it. The issue is Yellen’s dealings with all the companies that paid her so well so recently and are now involved in controversies of significant public import. The question is not going away.
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