Fed. Chief Powell Orders Sweeping Ethics Review Amid Trading Scandal at Federal Reserve
21:05 GMT 17.09.2021 (Updated: 18:55 GMT 19.10.2022)
© AP Photo / Susan Walsh
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Federal Reserve Chairman Jerome Powell ordered a careful examination of the central bank’s ethics rules after several Fed presidents disclosed multimillion-dollar investments.
Powell gave the order amid an outcry over officials owning individual securities bought during the COVID-19 pandemic in 2020 that raised questions about the Fed’s oversight of central bank officials.
“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,” a Fed spokesperson said.
News of Powell’s inquiry came to light after Sen. Elizabeth Warren (D-MA) sent 12 letters to the Fed bank presidents, demanding more stringent restrictions governing financial holdings and dealings by senior officials.
FILE- In this Feb. 5, 2018, file photo, the seal of the Board of Governors of the United States Federal Reserve System is displayed in the ground at the Marriner S. Eccles Federal Reserve Board Building in Washington. Richard Clarida, President Donald Trump's nominee for the No. 2 post at the Federal Reserve, pledged on Tuesday, May 15, to support the Fed's twin goals of stabilizing inflation and maximizing employment while also declaring the importance of the central bank’s independence.
© AP Photo / Andrew Harnik
“Officials should be careful to avoid any dealings or other conduct that might convey even an appearance of conflict between their personal interests, the interests of the system, and the public interest,” a statement that’s encompassed in the Fed’s code of conduct.
After receiving public backlash on their trading activity, Fed President Robert Kaplan and Fed President Eric Rosengren would relieve any individual stock holdings by September 30. They defended their stance on their trades not violating any Fed ethics rules.
Powell emphasized that officials must abide by the Fed’s rules where they are required to avoid the appearance of conflict or of using their position for personal gain.
It is not clear how long the ethics review will take.
