Federal Reserve Chairman Jeremy Powell ordered staff to review ethics rules for the central bank. This directive was passed after reports were released that showed that several senior officials had made multiple trades amounting to several millions of dollars last year. Other officials had significant investments as well.
Earlier, on September 14, Senator Elizabeth Warren sent letters to 12 regional presidents commanding them to expect stricter ethics from the top central bank officials in the U.S. Following the letter, Fed chair Powell instituted an inquiry.
Earlier in September, the Wall Street Journal had reported the trading activities of Dallas Fed President Robert Kaplan. He had bought and sold several multi-million stakes in companies including
- Delta Air Lines
- Johnson & Johnson
- Occidental Petroleum.
After the WSJ report, Bloomberg said that Boston Fed President Eric Rosengren had completed many transactions in a few real estate investment trusts. He also held stocks in Pfizer, Chevron, AT&T. These transactions took place in 2020 when officials from the fed reserve were deliberating over a rescue plan for the nation.
Richmond president Thomas Barkin disclosed almost no trading activity but has financial holdings in millions in Coca Cola and a mutual fund’s investment company. A Fed spokesman told CNBC that Powell had ordered a fresh and comprehensive look at the ethics rules that permitted financial holdings and activities by Fed officials as the agency required the trust of Americans to carry out its mission.
Powell’s review suggested that the Board might implement more stringent and standardized rules to maintain a high standard of ethics. Last Thursday, both the Dallas and Boston reserve banks released nearly identical statements which said their investments were in compliance with fed ethics rules. However, they also said that they would sell their individual stock holdings after they faced criticism from the public.
The recent disclosures come at an awkward time for Powell as his current term as chair ends in February. He was appointed by former president Trump in 2018 though he earned the former president’s ire. President Biden is considering Powell ‘s reappointment as Powell’s detractors say that he was not strict enough with Wall Street. The recent revelations have come at a critical time as his post as chair could or could not be renewed.