Having previously explained the 175,846,629,768 reasons why former Fed Chair Ben Bernanke would join Citadel [18] - the most-levered hedge fund in the world and alleged conduit of fed put protection; we thought it intriguing to note what billionaire Citadel Ken Griffin had to say about Bernanke and his policies just 2 years ago...
The revolving door between Wall Street and Washington doesn’t often involve big banks like Citigroup or Goldman Sachs anymore. Instead, as Forbes' Nathan Vardi reports, [19] hedge fund and private equity firms have become the destination of choice. They are richer and guys like Bernanke feel they are less controversial than the big banks.
But, ironically, Griffin has been publicly critical of some of the more prominent Federal Reserve policies that were implemented on Bernanke’s watch. He particularly took some shots at those policies in 2013, as Bernanke was coming close to finishing his run at the Fed.
In a statement on Thursday,
Griffin said that Bernanke “has extraordinary knowledge of the global economy and his insights on monetary policy and the capital markets will be extremely valuable to our team and to our investors.”
But two years ago - he was not so sure...
Here are some of Griffin’s criticisms of Federal Reserve policy during the Bernanke years.
To The Economic Club of Chicago, May 2013:
“I think QE3 is a terrible idea because we are now reaching the point where the Fed is becoming captive to our political institutions. You see with the Fed owning several trillion dollars of U.S. Treasuries it’s easy to imagine that at the next confirmation hearing the questions posed by politicians will be of the nature, will you continue to help subsidize the cost of the U.S. federal government’s borrowings even at the ensuing risk of potentially creating uncontrollable inflation? That last part won’t be asked but that will be the risk. And I think there will be real pressure on picking people to the Federal Reserve board who will appease our politicians and continue to try to drive interest rates to an artificially low level, very worried about that, very worried about that.”
To The Milken Institute Conference, April 2013:
“The Federal Reserve is really trying to counteract a number of the very poor policies that are coming from our legislative and executive branches and it’s damn near impossible to overcome the headwinds created by Obamacare, an inability to reform tax policy, inability to thoughtfully create jobs in our country and the Fed’s policies are doing two things that I am very gravely concerned about. Number one is we have all learned over the years that if you reduce the cost of capital you increase your use of fixed assets and you take out jobs. Corporate America seeing an ever increasing cost for its employee base and extraordinary low interest rates is taking every step they can possibly take to reduce employment, to build factories abroad and domestically to substitute technology and automated processes for people. So one of the very sad negative characteristics of the Fed’s policies is it’s leading to job destruction.”
* * *
This 'flip-flopping' though, is understandable - the only 'edge' any fund has anymore is an inside line on monetary policy headlines and actions and the fee generation from running the Fed's trades likely came with some quid pro quo...
