How Russian Tricksters Duped the US Fed Chief (feat. Josh Gondelman, Katherine Blanford and Adam Gilbert)

This is Special Agent Regal, Special Agent Bradley Hall. The time is approximately 11.15am about to start a consensual telephone call with Dr. Dawa Sang. China's Ministry of State Security is one of the most mysterious and powerful spy agencies in the world. But in 2017, the FBI got inside. Hey, you're hot, you're hot, you're hot, boy, you said, I'd never seen that much evidence in my entire career and I don't think we'll ever see that much evidence again. I now have several terabytes of an MSS officer no doubt no question of his life. And that's the unicorn. This is a story of the inner workings of the MSS and how one man's ambition and mistakes opened its vault of secrets. Listen to the 6th Bureau from Bloomberg Podcasts starting on February 13th on the IHART radio app, Apple Podcasts or wherever you get your podcasts. Jason Leopold starts every morning the same way. He wakes up in his Los Angeles home early, sometimes too early. Sadly, at like 4 or 4 or 30. The house is still his wife. Sleeping his dog. Bella look Aussie also sleeping. The room's pitch black curtains closed and then I see the glow of my cell phone calling to me. Pick me up Jason. Pick me up. See what's going on. Open me. As he reaches toward the nightstand for his phone, he's thinking, please let there be a whole bunch of documents. Please let there be a whole bunch of documents. Please. And if there are documents, I'm not going to at first. I want to save it till the very end. In the meantime, he's checking his push notifications for news that broke on the east coast while he slept. I'm thinking, okay, for your request, interesting, we'll save it. I wake up feeling like I constantly have to find a new request. I don't like to fall behind. So I've been building this pipeline for nearly 20 years. April 27, 2023 was no different. That day, he was scrolling Twitter. It was called Twitter then. He's scrolling. Scrolling through. Scrolling. Scrolling through. Until. A tweet from his colleagues at Bloomberg caught his eye. Fed chair Jerome Powell held a call with Russian pranksters who were posing as Ukrainian president Volodymyr Zelensky. According to video shown on Russian TV, I mean, I just laughed. Jason couldn't click the article fast enough, but after reading it, he had more questions than answers. The most obvious one. How the hell was he to by Russian pranksters? This is Jerome Powell. He's the chairman of the Fed. He said it's interest rates. So, by how did that happen? Jason left out of bed, giddy, pacing. I'm already imagining what the records look like, and I know there's gotta be records, and I'm playing out the scenario of me getting the records. Only one thing left to do. I have to file a request right now. Turn it up. I'm investigative journalist Jason Leopold. I spend most of my days getting documents from the government. I'm attorney Matt Tappock, and I fight them in court to open their files when they don't want to. From Bloomberg and No Smiley. This is Disclosure, a podcast about buying loose government secrets, the Freedom of Information Act, and the unexpected places that takes us. Hey, Matt, have you ever been pranked? I took fault for a scam. It was an email from someone that was like, I need help buying Amazon gift cards. I don't know, like, I can't get it to work. Can you please buy me these gift cards, and I'll pay you back. But if you ever met the person that it was purporting to be from, 100% that person would have done that. Whoever scambed it, they just dumbed lots into the exact right person. I kind of fell for it, and then I got a call from Amazon. It was like, hey, it looks like somebody's trying to scam these, and then I felt like a real idiot at that point. Yeah, that is an elder abuse scam. I'm not even half as old as you. You know, who else has been pranked? The chairman of the Federal Reserve, Jerome Powell. The thing is, Powell's a guy who's walking in the shoes of Alan Greenspan, Ben Bernanke, and Janet Yellen. When a Fed chief coughs, markets move. If there's a formula for job success, it's that you run the central bank of the world's biggest economic power while saying it's little as humanly possible in public about how you plan to do it. So back in April of 2023, Jerome Powell found himself in a pickle. It turns out a meeting he thought he had with Ukrainian president Philotomyr Zelensky wasn't actually with Zelensky at all. It was with these two Russian pranksters, and this all came to light in a video of their meeting that went viral on social media. I see all this, and I am, I am like, this is incredible for a material like that. I knew there had to be a report. I knew that there was probably a bunch of emails behind the scenes, so I filed this request with the Federal Reserve. What did you ask for it? So whenever I filed a request, I try to imagine like being a fly on the wall as everything sort of unfolding within a Federal government agency. What does that consist of? I'm imagining that while this was being planned, that there's some email traffic, there's some discussions. It would be very clear that there'd be some kind of investigation, right? I just know that from filing similar FOIA requests with agency inspectors general. So I asked for final reports of an investigation that may have taken place into how Powell was duked. And so I kind of kept it pretty narrow. I asked for a few days of records. You first get an acknowledgement that says, yes, we have records in reprocessing them. So first just get an acknowledgement letter. We got your request. I check in with the Federal Reserve. They say they're processing the records. They send me a few pages and withheld more than 100 due to an ongoing investigation. And the fighting begins with Federal Reserve in terms of trying to probably lose these records. So to quote the song, Waiting Room by the great post hardcore band Fugazi, I am a patient, boy. I wait, I wait, I wait. So I waited until I got a nod from sources that the investigation was over. And then in February, 2024, I filed a new request for some documents that I'd requested a year earlier. And this time I hit pay der. I have to hand it to the Fed. They turned over a lot of documents that really kind of lay out the timeline, investigative reports, staff emails with dates and timestamps. And I got to tell you, the whole thing kind of played out like a movie. So we're going to tell you parts of it like it's a movie for your ears. We've even invited a few comedians to read the emails. Oh, yeah. Like who? Well, Matt, we've got Josh Gondelman, Catherine Blanford and Adam Gilbert. Awesome. I'm so excited. All right. Here we go. Act one, scene one. Next after 8 a.m. on the morning of January 10, 2023, Powell's assistant received an email from Ukrainian email address. Subject. President of Ukraine, Chairman Powell, request. It says, as read by Josh Gondelman, the way he would read it if he was the one who wrote it, dear, redacted. The employee's names were withheld. President of Ukraine, Vladimir Zelensky, would like to have a conversation with Chairman of the Federal Reserve System, honorable Jerome Powell. The email signature says it's from the deputy head of the office of President Zelensky, a man named Kurelo Tymashenko. He says Zelensky wants to personally congratulate him with recent holidays. So wish him a happy new year, I guess. And discuss common issues and plans, such as murder the impact of war in Ukraine on the world economy and a forecast on the economic situation in the world. A foreign government wants to know what the feds forecast of the future of… Everybody wants to know that, right? Isn't that like the thing they don't do or when they do, it's very, very carefully crafted? It's like, first of all, this is non-public info. Yeah, totally. How it probably does have a forecast on the world economy based on lots of insider information. I hope so. So the fact that they even made that pitch and the assistance is like, right. So it's congratulations on the holidays. We want to talk to you about the impact that the Ukrainian war is having on the world economy and we want to know whether we should buy gold or what we should do in the future before you make any public announcements. Okay, all right, I'm with you. Continue. He's like, Zelensky just had a productive chat with the president of the European Central Bank, Christine Lagarde. It went so well we want to do it again with Powell. We are ready to organize a video or telephone conversation at any time convenient for your side. I will wait for your response with best regards, Kirilo Tima Shanko. Is Tima Shanko a real person? Yes, that's the real name of an official for the Ukrainian government. Four minutes later, Powell's assistant responded with this email as read by Catherine Blanford. We are in receipt of the request and we will revert back. So do we have any idea how they got this email address? Yes, they got it from someone at the European Central Bank according to the rest of the email thread. If LaGarde took the meeting, Powell probably should too. Do we know whether Powell has had other such calls with other world leaders? Like is this a normal common thing for him to be doing? Certainly other officials such as Christine Lagarde. I mean, that seems normal. But speaking to the president of Ukraine, I mean, yeah, it's I haven't seen any of it. A few hours later, the assistant responded again. Powell had agreed to the meeting. The assistant proposed dates and times. They settled on January 19, 2023 at 9 a.m. Washington time. All right. So they're trying to sell it by being like, hey, we know Zelensky previously talked to the European Central Bank. Did that actually happen? Was there actually such a meeting? Well, come. We'll get into that. A lot happened in those nine days. Sir, and is mounting this morning over a new COVID sub variant that is rapidly spreading across the country about an hour and a half before the call was scheduled to begin. Someone at the Fed wrote an email with a change of plans. The air key reload chair Powell has tested positive for COVID. He is very much looking forward to talking with president Zelensky, but we would appreciate if the call today could be postponed. We will work to reschedule the call as soon as possible. Thank you for your understanding, sincerely redacted. Wait till the records tell us what this person is doing when they're sending the emails. No, Matt. Unfortunately, these records do not include vibes. But it's not hard to imagine the esteemed venues where important government work takes place. So we've supplied some. Less than 20 minutes later, dear redacted. President Zelensky wishes share Powell a speedy recovery. Of course, let's move this conversation to a more favorable time. Also, I know that this conversation is very important for President Zelensky, and we are ready to arrange it at a convenient time for chair Powell as soon as possible. January 24, 2023 was the new date of the call. So January 24 comes and Powell is still recovering from COVID at home, but he's well enough to put on a black sport jacket over a white collar shirt and gold tie to hop on the video call. Let me just say it's a great honor to speak to you. Now we don't know what Powell is actually staring at right here because the recording doesn't show us Zelensky side of the video call. But we can see Powell. He's thin with a full head of gray white hair. His virtual background appears to place him in a tranquil reading nook with white walls, a yuppie white couch, and a dainty white T-set overlooking us a colluded forest. It's like I know you're living in a war zone, but look at this great environment that I get to live it. I'm aware that Ukraine's suffering. People like me just want to support you in any way we can't, but I have limited ways to do that in my professional job. Powell is clear from the jump that if this call is about money for the war, there isn't much to discuss. No matter. I think that you are a wise person, one of the wisest person in the world. He asks about whether Russian sanctions are working. It seems like the Russians have been able to avoid the harshest application of the sanctions. He debriefed Powell on his call with Christine Lagarde, who he claims said the United States can win any war at any cost. There will be only one winner who has begun. She told me that. She even solicited Powell's opinion on his counterpart, Russian Central Bankhead, Alvera Nebulina. She's quite good at her job. She's extraordinarily capable. At one point, the discussion veered into one of the touchiest subjects pertaining to the US economy. Interest rates. If the rate is raised further, the standard of living of the population will fall. So how much should it fall in order for the Fed to stop raising the rate? All sort of grimaced and looked off screen. Perhaps surprised by the question. Why on earth would Zelensky be asking these questions? Isn't Powell like, what the hell does this have to do with Ukraine? He should have been very suspicious at this point. The market is already pricing in two more quarter percentage point rate hikes. We'll look around after we make those two and we'll say, you know, should we do any more? And then the question will be, how long do we keep rates at this level? And I think we'll keep them there for quite some time. Is this all things he's already said, like is he just telling him what he's already publicly said? Well, that's the question. But let's come back to that. And then comes the weird asks, we haven't gotten to the weird part yet. No, we're not there yet. Okay. All right. I'm so excited. Let's have it. If you could present me printing press, I would be really happy. We have one of those, but we keep it in the basement. Okay. You could also build a 14th bank of the Fed on our territory. Let me come back to you on that. Maybe we'll have a reserve bank and keep. He wants a print. Wait, wait. He's asking Powell if he can have a printing press to print money. Is that right? Yes. I've died. It is hilarious. The 30 minute call was zesty to say the call. 30 minute call. Man, that's who should be running the US government. It's these pranksters because it's pretty good. I was really happy to talk to you. And that was it. And mind you that this was a two week or deal of setting this up. According to the documents, the Federalist, there was never once a moment where anyone said, you know, hey, let's. Let's check out the email addresses or have our security team confirm any of this. It was just through email setting it up. It was pretty easy. So no one on Powell's staff has ever seen the movie Borat. Come on, that is the Fed. You think they're sitting around watching Borat? I mean, somebody should. And three days after the meeting, that's when the unraveling began, which you'll hear all about after the break. The news doesn't stop on the weekends. Context changes constantly. And now Bloomberg is the place to stay on top of it all. Hi, I'm David Gurra. Join us every Saturday and Sunday for the new Bloomberg this weekend. I'm Christina Raffini. We'll bring you the latest headlines, end-of-the-analysis and big interviews, all the stories that hit home on your days off. And I'm Lisa Mateo. Watch and listen to Bloomberg this weekend for thoughtful, enlightening conversations about business, lifestyle, people and culture. On Saturday mornings, we put the past week's events into context, examining what happened in the markets and the world. That on Sundays, we speak with journalists, columnists and key political figures to prepare you for the week ahead. Join us as soon as you wake up and bring us with you wherever your weekend plans take you. Watch us on Bloomberg Television. On Bloomberg Radio, stream the show live on the Bloomberg Business app or listen to the podcast. That's Bloomberg this weekend. Saturdays and Sundays starting at 7am Eastern. Make us part of your weekend routine on Bloomberg Television, Radio and wherever you get your podcasts. It's 6.59am on January 27th, 2023. That's one of message lights up. Dear Redacted, President Zelensky would like to thank Chair Powell once again for this important conversation for us and express gratitude for his professionalism. He has a small request. Could you connect us with Secretary of the Treasury, Janet Yellen, so that President Zelensky could discuss the economic situation with her directly? President Zelensky would like to hold this conversation informally without the attention of the press. Therefore we thought that through you, it would be fast and confidential. The assistant did as requested and shared Yellen's contact information. I can't wait to hear how that went over. Then a couple of weeks later, on February 10th, something appeared to have spooked Powell's assistant. They emailed the person in LaGuard's office at the European Central Bank to ask about Tommaschenko's initial outreach. Dear Redacted, I just want to confirm that the email below, C-Trail, is a legitimate email from you and that a phone call with President Zelensky did occur from your office. Best regards, Redacted. Then 15 minutes later, LaGuard's office responded as read by Adam Gilbert. Dear Redacted. And it sure didn't quail anyone's anxiety. The issues of Bitt Harry, we weren't taught with Mr. Tommaschenko and a video call between President Zelensky and Adam LaGuard to place on 6th January. But in the meantime, they explained that they'd recently learned that Tommaschenko had resigned from this position and shared a Wikipedia link to prove it. Apparently he left office on January 23rd, the day before the Powell meeting. They had since heard from Tommaschenko or someone claiming to be him, which raised some alarm bells. So I assume this is not true. Seeing that Mr. Tommaschenko now left the office of President Zelensky and all the above, I would be extra cautious when handling his request. Kind regards, Redacted. Oh, so in other words, LaGuard's office isn't sure if they spoke to the real Tommaschenko? Correct. Seven minutes later, Powell's assistant wrote back, Thanks, Redacted. This is helpful. You can almost feel the panic beginning to set in. What is it that raised suspicions? Do we know? And it wasn't, for example, could you please send us a printing press so we could print a Macon Ballons or build a Federal Reserve Bank in Ukraine? That wasn't what tipped it up because they already gave over Yellen's contact information after that. So it must have been something after that. Have you ever had that moment where suddenly like an entangus goes up, it just suddenly hits you like, was this all a ruse? And that's how I imagine this assistant was feeling just I've been duped. Maybe that really wasn't a Nigerian prince. Yeah, exactly, exactly. On the same day as the email exchange to the European Central Bank, the Federal Reserve Board of Governors lodged a complaint with the agency's office of Inspector General. Four days later, on February 14th, they launched an investigation in part to sniff out an imposter. That question would answer itself. I'm glad you made time to speak to me. On April 26th, the video appeared on Routube. Is it Russian YouTube? I mean, that's what it sounds like. Exactly. I got it. They never fool me. Your opinion is really important for me. So I'd like to ask you what is about what is your views? Turns out the imposter's were two well-known pranksters nicknamed Vovon and Lexus. They've been pulling stunts to embarrass world leaders for years. I love it. In 2017, they impersonated another Ukrainian official on a call with then congressman Adam Schiff. Okay. And what's the nature of the Compromot? And convinced him that Putin was blackmailing Trump to cancel Russian sanctions. Well, there were pictures of naked Trump. Okay. Shiff's people who said they thought the call was bogus told a number of news outlets that they reported the call to law enforcement. The pranksters struck again in 2020. My friend, a singer, Billy Eilish and rapper Kenny West, also fans of you. They got Bernie Sanders by posing as Greta Thunberg and her father, saying they had some creative ways to endorse his campaign. They would like to do a cool rap. Rap music is popular now. Rap music is very popular. That's really very Sanders saying that, you see. The Sanders campaign didn't comment on the authenticity of the call, but Vovon and Lexus had a hot streak of posing as Zelensky. As your fan, is Dembel Dorge. In 2022, they called JK Rowling. I ordered that our fighters write Avdrak Kedavra. Avdrak Kedavra. Yeah. Yeah. On the missiles that we will launch. So how do you like this joke? I love the joke. I love the joke. A spokesperson said rolling was a victim of a distasteful hoax. Can we put in some audio of what Zelensky actually sounds like? Am I crazy? The guy doesn't sound anything like him at all. Okay. Well, here's the real Zelensky. That's it. The biggest the need of support and of peace. We have to be very open to understand how to stop the war. It's just not sound like Zelensky. I haven't seen anything like this. And the reality is we were never supposed to see this, right? This was supposed to be a private conversation with who power fought with Zelensky. So what these pranksters throw out there publicly was something we were not supposed to get any insight to. The video went viral. And when the news made it to the US, other journalists inundated the Fed spokesperson with questions. I wanted to verify Bloomberg report and see if you had a statement of Fed Chair and the chairman. For the most part, the spokesperson brushed the incident off. She told one Fox reporter that this happened to a number of officials, including Lagarde. So they did get Lagarde? They did. A video of the pranksters posing as Zelensky dropped a month before the Powell video. Lagarde didn't seem to make any public comments about it though. Okay. Continue. The Fed spokesperson added, quote, I really hope that Fox business might decide not to give fraudulent hoaxes more attention. In a legitimacy, by far they're spreading their work. And what happened? Did Fox refrain from doing a story? Oh, of course not. Everyone reported on this. Beyond that, there wasn't much more to learn about the issue until I got the documents. Do you want to know what they said, Matt? Yes. In November 2023, the inspector general issued their report. Do you usually find that IGs are like on the more generous side of how much they'll give you versus how much they'll withhold? Well, it depends on the IG, which agency you're dealing with. Keep in mind, one of the second Trump administration's first moves was firing the inspector's general from a bunch of departments and agencies. But for this request and a lot of others I filed, the Federal Reserve has been transparent in terms of what their IG will disclose. What they uncovered wasn't exactly espionage, but it was a stark reality that all it takes to trick what we hope is a secure institution. The United States Central Banking System is charm, timing, and a thimble of plausible deniability to slip past the gate. The purpose of the investigation was to determine if any, quote, criminal statutes, regulations or agency policies within were violated. This was an embarrassing breach. So the questions are, how did it happen? Who approved it? Were warning signs missed? The inspector general got to work. Not with flashing lights or raid jackets, but with something more bureaucratic and arguably more invasive. Email lots of it. They pulled the thread back to January 10, 2023, to the very first message that arrived at the Fed on behalf of the impersonator. Then they cast a wide net. Anyone who touched the meeting scheduled it, heard about it, mentioned it and a reply all had their inbox pulled into the dragnet. The scene's 11 employees across three departments were summoned for interviews, including Chair Powell himself. The names of some others are redacted, but the bewilderment wasn't because after all of that, investigators found, quote, no violations of law, regulation, or policy associated with this matter. Sounds a bit like nothing to see here, right? Law and regulation, I could see that. How was there not a policy that was violated here? Like isn't there a policy that's like, don't give interviews with people that aren't really who they say to be? Well, here's the real issue. It's unclear if there were any protocols in place to prevent this from happening. The report is detached and bureaucratic, making you read between the lines quite a bit. It passively identifies major vulnerabilities without naming them as failures, and there were many failures. So it sounds like it. Let's take the emails. While those interviews told OIG investigators that, quote, attention to detail regarding incoming email is crucial, end quote. And that's so sure about that. I mean, the email addresses are amazing. What are they? The email addresses are office.president at ukr.net. And airmac at zolensky.team. Have you ever had those like fishing exercises to make sure that you're not fish, right? And they're always like, you know, check those domain names. So they're just getting emails from what they think are the Ukrainian government or Ukrainian government officials from dot team and at at ukr.net. People government email accounts generally don't reside on a dot net or dot team domain. Right. They reside on personal signal accounts as we all know. Right. But you see, the report doesn't even explicitly discuss this email oversight. I just love this part of the report. It says staff members are taking a closer look at senders email addresses and verifying contacts as necessary. It tells me absolutely nothing. That's like, that's already it says nothing, but it also says everything because, hey, the board of governors is saying that federal reserve board that they're going to start taking closer look at senders email addresses and verifying contacts as necessary. I'm assuming they haven't been doing that previously, but clearly they were not doing that previously. So that's saying like we're going to start doing things that have been recommended for the last 30 years and dealing with the internet. Now whose job was it to verify the contact? Investigators learn that when the impersonator reached out to Powell's assistant, quote, no single person or group was solely assigned to verify the identity of foreign individuals who contact the board to request to communicate with board members or officials. The reason they don't usually have to. Powell has quote, long standing relationships with his international counterparts and one on one communications tend to be with individuals well known to him. Yeah, like so what? Why does this matter? This is not about foreign contacts. This could have been anything, right? This could have been Fox News is reaching out or this could have been like the head of some US bank. This has zero to do with the fact that the scammers were not based in the US or that they pretended to be somebody not in the US. They're completely missing what the issue is, I think. Yeah. I mean, they could have been fished by anybody. Right. The question just have been like, do they have procedures to ensure that like they're not getting fished or they're not getting scammed or that they generally ensure that a purported center is the real center, not specifically to only when it's like foreign leaders of other countries. That just seems like a way that they could dodge like the real question. And just like, oh, this is like super specific thing like they, you know, this hasn't come up before. Instead, Fed staff relied on the exchange with the European Central Bank at the bottom of the email thread as verification enough that the request from the imposter was legit. Generally, when foreign officials do reach out, Fed staff are supposed to contact the treasury department, which the Fed's international finance division did do. No one raised any concerns and quote, all felt comfortable with chair Powell meeting the individual because the guard at the European Central Bank recently had a conversation with the same person, but that process doesn't involve verifying the identity of the person asking to talk to Powell. The Fed also doesn't have a process to loop in external agencies such as the embassy's department of state or the White House to verify the identity of a requester. According to the records, yes, Matt, the entire show is about records. I'm just making sure the listener is following nor are internal security and intelligence departments regularly involved with vetting communications between the Fed and foreign officials. This all feels like if you were making people like do an online training about email security, this would be like the one that's like obviously wrong when you see what the other ones are, right? They're all reserved and it was stunning to see how the security vulnerabilities reached all the way, you know, right to Powell's door. So chair Powell stated that international finance is responsible for ensuring that foreign officials requesting to communicate are properly verified and vetted. Powell's throwing, you know, the international finance division under the bus. Chair Powell reiterated that this one-on-one meeting with the Zelensky impersonator was extremely unusual given that nearly all of his communications are with people he is already deeply familiar with. So he's saying his communications are all with people he's deeply familiar with. I guess if he had any familiarity with Zelensky, then he would recognize that was obviously not Zelensky's voice. Right. But speaking of what Powell heard, let's get into what happened on the video call itself. After the break. Hello, I'm Michelle Hussein and for more than 20 years, I was at the BBC. But all the time I was delivering the headlines, I wanted to go further than the news of the day to spend more time with the people shaping our world. And that's what I'm doing here on this podcast. Speaking to people from Nigel Farage, to tech journalist, Kara Swisher. And the tech industry is running wild. You know, they've gotten what they wanted and they've seen a huge run up in their stock prices. This will be a place where every weekend you can count on one essential conversation to help make sense of the world. So please join me, listen and subscribe to the Michelle Hussein show from Bloomberg Weekend. Wherever you get your podcast. He doesn't ask interesting questions. Okay. So Matt about the video, it's worth mentioning that the report doesn't explicitly say what Powell was looking at, which spares him some embarrassment. Volvano-Alexis have been known to use deepfakes, but it's unclear if that's the case in this instance. What Powell did recognize is that Zelensky was surprisingly better at English than he expected and appeared to be reading from a script. Investigators found that the impersonator did not ask for any money, papers, documents, or other things of value during the conversation. Wait, wait, wait, hold that a second. That is so clearly wrong, right? Yeah. I think that's like, it asked for a printing press. Pretty press. I think that's not true. And basically, essentially said, can you build a bank, a federal reserve bank and you create? But this is where it gets serious. There's a question of whether or not Powell had disclosed potentially confidential federal open market committee information to the Zelensky impersonator, particularly because Powell talked about interest rates. This is what you asked about earlier. The answer, it depends on who you ask. One person interviewed said Powell's statements, quote, give at least an appearance of looking like confidential information, but Powell disagreed. So let's think about what he said. The market is already pricing in two more quarter percentage point rate hikes. As far as the market expectation goes, that's true, but it's what he says next. We'll look around after we make those two and we'll say, you know, should we do any more? Powell told the IG he didn't think his comments, quote, met the definition of confidential information because of the broad market expectation that at least two interest rate increases were going to occur, which the IG corroborated. Now, does that mean that Powell had said that before or that it's no big deal because everyone was already assuming that to be the case, because they'll seem like a little bit different to me. Yeah. I mean, it was essentially that there was an expectation based on the climate that at least two rate increases were going to happen. All right. So that's why this pisses me off because if you try to get anything out of the Fed under FOIA that has not already been publicly said, they will tell you to f*** off. Like they're not going to give you anything. They're going to say that anything that the chairs ever said can move markets. And so like, we're not going to tell you what time that meeting started or whether they served coffee. They will give you nothing at all if you make a FOIA request on the theory that it will all these bad things will happen. But if I'm hearing you right, Powell said something to these impersonators that he had not publicly said before, but they're saying it's not a big deal because it's what everybody thought was going to happen anyway. Do I have that just about right? Yeah. That's pretty much about right. You can say that he's confirming the market's expectation. And at this time, the Federal Reserve had not publicly announced a commitment to implement two additional quarter percentage point interest rate hikes. But the IG didn't take issue with this specific statement probably because even though Powell's comments gave the appearance that he might have disclosed confidential information, the chair has quote, the authority to up classify or down classify FOMC information at any time. So in other words, even though he may have disclosed non public info, he's got the authority to classify it or reveal it if he wants to. He has that unilateral authority to do that. I can think of at least one powerful government official who would very much subscribe to the view that he can say and do whatever he wants with any documents because he is the authority to do the same thing. While the meeting was preceded by quote, a rare set of factors, including Powell taking the call from his home due to illness, the IG concluded that nothing illegal took place. I'm going to say this to about inspectors general and I mean, no offense to any inspectors general, but the incentives would seem to be such that you want to show that you like found something wrong, but you also don't want to blow up the whole federal government. It's such an odd office. It's like part of the federal government, but it's supposed to like call out wrongdoing by the federal government. But I'm sort of skeptical how much it wants to like really, really take that on. I don't know. What do you think, Jason? People reach conclusions. They will make a referral or recommend an action, right? In this case, you know, what they said was they found no violations of law, regulation or policy associated with this matter, right? The bottom one is this they're not going to say you guys are a bunch of idiots. Get your sh** together. I'm not saying that they should be going out of their way to like publicly humiliate anybody or grandstand or get up on a soapbox, but I think that there can be a tendency or at least the effect of burying the reality of it in a bunch of bureaucratic sounding stuff that really kind of takes away from the public really understanding and appreciating the full ramifications of what happened. That's why I'm here, Matt, so I can help them appreciate what happened. I always forget, but thank you for reminding me that if we had excellent government in America, you and I would both have to find other jobs, right? I don't know what else I would do except slaying records. You could live up your t-shirt collection for like easily three or four years. Have to sell some sharks. So how could this have been prevented? Powell says the simple fix would entail an individual from the board calling the relevant embassy to verify the contact. I mean, either way that it's written, you know, you're reading it, it's so dry, but just think of that. Powell's like, I know how we can resolve this in the future. Just call the embassy to see if that person actually sent the email. Now we have to give credit where credit is due because someone did call the Ukrainian embassy just not Powell staff. That someone was in the Treasury Department and when they called quickly, they had their answer. President Zelensky never requested a meeting, but that didn't happen until February 8, 2023. By then, it was too late. The joke was on the Fed. So there's your answer, Matt. What's Spook Powell's assistant? None other than a little bit of due diligence that should have been done well before the meeting, but they wait. They didn't give it until after they reached out after after we reached out to the Federal Reserve for comment about this episode. But as of this recording, the agency has not responded. So what's your take on all this? The meeting revealed a breakdown in operational security and a need to overhaul security protocols across the board. But the IG makes no recommendations. And that makes me question if the scope of the investigation was too narrowly defined by, did anyone violate existing rules? The report does say that other internal agencies were also looking into this. But records responsive to that weren't in this batch of records released to me more than a year after the incident. This report is not instill a lot of confidence in the public that the Fed took seriously that it lacked elementary safeguards to prevent a massive breach by a foreign actor that could have had national security consequences. This is the kind of thing that drives people nuts about the federal government. Like you made a mistake. Just admit I made a mistake. I get it. This is what I'm going to do different next time. But Matt sort of like, oh, well, other people screwed up too. Or like, here's my excuse or like, the system really that big of a deal. Just own it for like five seconds. And then we can all move on. Like people smart enough to see through that. And it makes them really mad. I agree. Is this inspector general one of the inspector generals who's since been fired? Nope. He wasn't touched. That was hoping maybe we could we could get the parcel on the pod to talk about it. But right? Maybe we could. Maybe we can get Chairman Powell on the pod. Would you like to come on and discuss this report? We are who we say we are. Oh, that's good. So that's it for this one. But not for Powell and me. In a sense, we end where we began. On an April morning in 2025, Jason Leopold was sitting up in bed. I haven't brushed my teeth. I'm still there. Scrolling the headlines. When a story caught his eye. And I was like, oh, that's funny. I got to follow FOIA. So I followed a request with the Federal Reserve for all... Redacted. Because it's classified. Ooh, I can hardly wait for the records to come back, Jason. Well, Matt, I'll let you know what the records say in a few years. From Bloomberg and No Smiling, this is the Scalosure. The show is hosted by Matt Topic and me, Jason Leopold. It's produced by Heather Schroening and Sean Cannon for No Smiling. Our editor for Bloomberg is Jeff Grootcott. Our executive producers for Bloomberg are Sage Bauman and me, Jason Leopold. And our executive producers for No Smiling are Sean Cannon, Heather Schroening and Matt Topic. The disclosure of theme song is by Nick, with additional music by Nick and Epidemic Sound. Sound design and mixing is by Sean Cannon. The emails in this episode were read by Josh Gondelman, Catherine Blanford and Adam Gilbert. For more transparency news and important document thumbs, you can subscribe to my weekly FOIA Files newsletter at bloomberg.com slash FOIA Files. That's FOIA Files. To get every episode early on Apple podcasts, become a bloomberg.com subscriber today. Check out our special intro offer right now at bloomberg.com slash podcast offer. Or click the link in the show notes. We'll also unlock deep reporting, data and analysis from reporters around the world. We'll see you again next Tuesday. Did the Russian pranksters know out of FOIA? April 29th and 30th, Bloomberg House arrives in Miami at the Formula One Grand Prix. Set against one of the world's most electrifying sporting events, Bloomberg House brings business, investment and culture together. Powered by Bloomberg Journalism, real-time data and forward-looking conversations. From on-stage discussions to exclusive networking with global leaders, this is where ideas connect. Bloomberg House Miami. Learn more at bloomberglive.com slash bloomberghousemiami.