The Federal Reserve decided to hike interest rates by 75 basis points on Wednesday.
Former Director of the National Economic Council under Trump, Larry Kudlow welcomed their actions but said they should have come sooner and that he believed we were already in a recession, which he blamed at least in part on the Biden overspending and the infrastructure bill. But then he dropped a bomb in the last two minutes of this clip.
— America Reports (@AmericaRpts) July 27, 2022
“China has infiltrated the Federal Reserve,” Kudlow said. “China has infiltrated Fed research assistants.” He said that the Senate Homeland Security and Governmental Affairs Committee had been investigating.
According to the minority report, headed by Sen. Rob Portman (R-OH), this was no light probing effort by the Chinese, but was a broad-based espionage attempt targeting the Federal Reserve connected to China’s Thousand Talents economic espionage program.
“A Federal Reserve counterintelligence analysis identified 13 persons of interest as having connections with known Chinese talent recruitment plan members or ‘having similar patterns of activity the [Federal Reserve] analysts deemed’ of potential concern,” the new report says. “Federal Reserve investigators dubbed these individuals, representing no fewer than 8 of the 12 Federal Reserve Banks, as the P-Network.”
The Senate report said the actions of those individuals and their connections to Chinese talent programs are “alarming” and provide “stark examples of the ways in which the Chinese Government has attempted to gain access to sensitive internal information and influence” the Fed.
“I am concerned by the threat to the Fed and hope our investigation, which is based on the Fed’s own documents and corresponds with assessments and recommendations made by the FBI, wakes the Fed up to the broad threat from China to our monetary policy,” Portman told the Washington Examiner. “The risk is clear. I urge the FBI and the Fed to do more to counter this threat from one of our foremost foreign adversaries.”
So, you would think that Jerome Powell, the Chair of the Federal Reserve, would be concerned and thank Portman for the information.
Instead, Powell appears to be attacking the report, saying they were “troubled by what we believe to be the report’s unfair, unsubstantiated, and unverified insinuations about particular individual staff members.”
The report showed this had been ongoing since at least 2013 and detailed all kinds of evidence, even five “case studies” of employees being targeted.
Chinese officials “forcibly detained one Federal Reserve Bank employee on four separate occasions during a 2019 trip to Shanghai” and “threatened the individual’s family unless the individual provided them with economic information and assistance, allegedly tapped the employee’s phones and computers, and copied the contact information of other Federal Reserve officials from the individual’s WeChat account,” according to the report.
The investigation also “found multiple U.S. Federal Reserve employees with close ties to the People’s Bank of China,” while one Federal Reserve bank employee held a position in 2017 with the Chinese central bank, which was meant for “overseas, top performing talent with directly applicable, advanced modeling experience, and insight with China and U.S. economic monetary policy.”
“One Federal Reserve Bank employee with sensitive access to Federal Reserve Board data provided modeling code to a Chinese university with ties to PBOC,” the report says. “Another Federal Reserve Bank employee attempted to transfer large volumes of data from the Federal Reserve to an external site in at least two separate instances. The individual had continuous contacts with Chinese nationals and universities associated with talent recruitment programs as well as access to sensitive datasets ‘considered of high value to an adversary’ and had previously received a request from an individual with ties to the Chinese Government for non-public information.”
Portman said that the Chinese were taking advantage of the Fed’s lack of “internal counterintelligence competency or sufficient ongoing cooperation with Federal law enforcement and intelligence agencies.”
This is an incredibly serious thing, particularly detaining the employee to force him to comply, but it raises the concern of how deeply engrained China is and how many people have they compromised. This isn’t just regarding things like the Fed, but we saw how they did this with politicians as well, with Rep. Eric Swalwell (D-CA) and Fang Fang. But unfortunately, we don’t even know if we can count on the Biden team to truly address these concerns–when there are even questions about Biden being compromised.