WASHINGTON, Sept 17 — Federal Reserve Chair Jerome Powell has ordered a review of the institution’s ethics rules regarding financial transactions after two regional bank presidents reported large stock trades, a spokesperson said Thursday.
“Because the trust of the American people is essential for the Federal Reserve to effectively carry out our important mission, Chair Powell late last week directed Board staff to take a fresh and comprehensive look at the ethics rules around permissible financial holdings and activities by senior Fed officials,” the official told AFP.
“This review will assist in identifying ways to further tighten those rules and standards.”
The announcement came days after the presidents of the Dallas Fed bank Robert Kaplan and Boston Fed bank Eric Rosengren came under scrutiny for their trading activity.
The two officials engaged in large stock trades in 2020, at a time when the Federal Reserve was aggressively acting to support the US economy amid the impact of the Covid-19 pandemic, according to financial disclosures first reported by The Wall Street Journal.
While the presidents said their activities were in line with Fed rules, they both announced last week that “to address even the appearance of any conflict of interest,” they would sell their individual stocks by the end of the month and put the proceeds into diversified index funds or cash.
The Fed spokesperson said the institution has the same rules as other US government agencies but central bankers also are subject to “a set of supplemental rules that are stricter than those that apply to Congress and other agencies.”
The official did not specify a timeframe for implementing any rule changes.
Chair of the Senate Banking Committee Elizabeth Warren earlier Thursday sent a letter to the 12 regional Fed banks calling for them to institute tighter rules.
“This controversy over asset trading by high-level Fed personnel highlights why it is necessary to ban ownership and trading of individual stocks by senior officials who are supposed to serve the public interest,” said Warren, who has also championed stricter regulations on government ethics rules and banking. — AFP