Fed’s Powell ordered an ethics review after officials began to sell stocks

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Federal Reserve Update

The Federal Reserve said on Thursday that it is reviewing its ethical guidelines on how senior officials participate in financial markets. Conflict of interest issues Questioned the investment activities of the two regional presidents.

Fed Chairman Jay Powell ordered a review late last week after reports that Dallas Fed Chairman Robert Kaplan and Boston’s Eric Rosengren were actively trading and invest.

Kaplan revealed this month that he holds shares in 27 listed companies, funds and alternative investments valued at more than $1 million, which was first reported by the Wall Street Journal. Rosengren listed shares worth at least $151,000 in four real estate investment trusts.

Both Fed chairmen announced last week that they would sell their stock portfolios before the end of this month and hold the proceeds in cash or invest them in diversified index funds to avoid “emerging” conflicts of interest.

They also stated that as long as they stay in their positions, they will avoid any stock trading.

“Because the trust of the American people is essential to the Fed’s effective execution of our important mission, Chairman Powell instructed the board staff late last week to re-examine the ethical rules regarding the Fed’s senior holdings of financial assets and activities. Officials,” the Fed The spokesperson said on Thursday. “This review will help determine ways to further tighten these rules and standards.”

The Fed stated that the rules that guide the personal financial practices of central bankers mirror the rules of other government agencies. There is an additional set of rules that are “stricter” than those that apply to Congress and other agencies.

A Fed spokesperson said: “The board of directors will make changes as appropriate, and any changes will be added to the Reserve Bank’s code of conduct.”

US Senator Elizabeth Warren of Massachusetts also issued an opinion on Thursday, calling on 12 regional banks to adopt stricter policies on individual stock transactions.

The Democratic senator said in a statement: “The controversy of senior Fed officials over asset transactions highlights why it is necessary to prohibit senior officials who should be serving the public interest from holding and trading individual stocks.”

“Regional Fed leaders must prohibit senior officials from holding and trading individual stocks, and implement strong and enforceable ethical and financial conflict of interest rules for themselves and their staff to restore public trust.”

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