The Fed’s Chair and Vice Chair’s Deep Ties to Carlye Group

It should give pause to every American that the two top men at the Federal Reserve who are now implementing a new $4.54 trillion bailout fund for Wall Street both got rich working for one of the world’s largest private equity firms.

By Pam Martens and Russ Martens of Wall Street on Parade.

Private equity funds have been variously called “merchants of debt,” “vultures,” or “corporate raiders.” What a private equity fund typically does is to buy up companies by piling debt on the balance sheet, selling off valuable assets like real estate, extracting giant dividends for the private equity partners to the detriment of workers and customers, and then, frequently, letting the company collapse into bankruptcy while laying off thousands of workers or liquidating the whole company.

It should give pause to every American that the two top men at the Federal Reserve who are implementing a new $4.54 trillion bailout fund for Wall Street, using $454 billion from taxpayers to absorb the losses, both got rich working for one of the world’s largest such private equity firms: the Carlyle Group.

According to his official bio, Fed Chairman Jerome Powell was a partner at the Carlyle Group from 1997 to 2005. In November 2017, Stephen Gandel, writing for Bloomberg News, calculated that Powell’s wealth could be as much as $112 million. 

The man responsible for supervising the largest and crime-riddled banks on Wall Street, Fed Vice Chairman for Supervision Randal Quarles, is even richer than Powell. According to Quarles’ financial disclosure form dated June 1, 2017, he could be worth as much as $125 million. In 2017, between $10 million to $50 million of Quarles’ investments were in Carlyle Group. On just those Carlyle investments, Quarles was receiving a range of between $2 million and $10 million in annual income. (The government allows federal employees to report a preposterously broad range on asset values and income on financial disclosure forms.) Quarles was a Managing Director at Carlyle Global Financial Services Partners from 2007 to 2013. The Carlyle investments have been replaced by different investments on Quarles’ most recent financial disclosure form.

Carlyle Group’s current and former partners are not defensive about the string of bankruptcies and jobless workers it has left in its quest to extract riches from its buyout targets. Carlyle had several bankruptcies during the last financial crisis with more blowups in the past two years.

In November 2018, Peter Whoriskey and Dan Keating of the Washington Post penned a devastating critique on how Carlyle had handled its investment in a chain of nursing homes known as HCR ManorCare, which filed for bankruptcy in March of 2018. The authors wrote that there was a 29 percent rise in serious health code violations at HCR ManorCare in the years before the bankruptcy and following a 2011 financial deal that “extracted $1.3 billion from the company” for Carlyle investors while saddling the nursing home chain with debt. Under the same deal, most of the company’s real estate was sold off, forcing it to now pay rent to the new owners. Hundreds of layoffs of employees occurred soon after, leaving the vulnerable residents neglected according to the article

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