Fed chair Jerome Powell stressed that the officials had not violated any existing rules, he nonetheless announced plans to review the ethics rules regarding investing
The Federal Reserve has asked its watchdog to investigate the trading activities of senior officials, the US central bank said Monday, after two resigned following criticism of their stock market activities.
As part of our comprehensive review, we began discussions last week with the Office of Inspector General for the Federal Reserve Board to initiate an independent review of whether trading activity by certain senior officials was in compliance with both the relevant ethics rules and the law, a Fed spokesperson said. We welcome this review and will accept and take appropriate actions based on its findings.
Last week, Dallas Fed bank Robert Kaplan announced he would leave his post on October 8, while Eric Rosengren, who leads the Boston Fed, moved his already-scheduled retirement up by several months to September 30.
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.
Fed chair Jerome Powell stressed that the officials had not violated any existing rules, he nonetheless announced plans to review the ethics rules regarding investing.
Last Friday, Bloomberg reported Fed Vice Chair Richard Clarida moved between $1 million and $5 million into a stock fund from a bond fund in February 2020, a day before Powell announced the central bank could act as the Covid-19 pandemic worsened.
Weeks later, the Fed slashed its benchmark lending rate to zero and pumped trillions of dollars of liquidity into the financial system to keep it functioning as the pandemic caused a sharp downturn.
A central bank spokesperson told AFP the trades are a preplanned rebalancing of his accounts made prior to the Fed’s deliberations over their reaction to Covid-19, and the funds were chosen with the approval of the bank’s bank ethics officials.
US stock markets plunged, but then shot up in the months to follow in a rally seen as partially fuelled by the easy money policies.