President Joe Biden's Press Secretary Jen Psaki dismissed concerns over potential conflicts of interest of Treasury Secretary Janet Yellen after it was revealed that she had been paid to speak at Citadel LLC.
Citadel, a hedge fund, bailed out Melvin Capital, another hedge fund, after it lost billions of dollars by attempting to short GameStop stocks. While GameStop had been on the decline for quite some time, creating the appearance of a safe investment, it experienced a sudden and unprecedented surge in price when thousands of independent investors purchased stocks of the company.
Citadel also has a relationship with the trading app Robinhood, with Fortune reporting that Citadel, along with a number of other companies, paid Robinhood nearly $100 million in the first quarter of 2020 alone. Robinhood became the subject of controversy after it began preventing its users from purchasing shares in GameStop and a few other companies which have been affected by the short squeeze.
As leaders in the finance industry have called for intervention from the federal government, the Psaki said on Wednesday that Yellen was 'monitoring' the situation, leading some to point out that she had previously received $800,000 in speaking fees from Citadel, a potential conflict of interest given its extensive financial ties to Robinhood and Melvin Capital.
"Are there any plans to have her recuse herself from advising the President on GameStop and the whole Robinhood situation?" Psaki was asked.
"Just to be clear, what I said was that we have the Treasury Secretary is now confirmed, obviously we have a broad economic team," Psaki responded.
"The SEC put out a statement yesterday that I referred to, but I don't think I have anything more for you on it," she continued, dodging the question.
"Separate from the GameStop issue, the Secretary of Treasury is one of the world-renowned experts on markets, on the economy, which shouldn't be a surprise to anyone [that] she was paid to give her perspective and advice before she came into office."
While Yellen, a former chairwoman of the Federal Reserve, is without a doubt an expert on markets and economics, such reassurances fail to address questions of conflict of interest, and whether Yellen would be able to fairly intervene in a situation involving a company she has received hundreds of thousands of dollars from.
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