Federal Reserve Chairman Jerome Powell has been named one of the most senior officials owning and trading the same type of individual securities the Fed itself was buying during last year’s pandemic.
Powell ordered a thorough review of ethics rules governing assets and financial transactions by senior U.S. central bank officials after Fed chairmen sold millions of stock options the year last.
Now the Fed chief himself is said to have held the same type of municipal bonds that the Fed bought, according to CNBC.
According to CNBC, Powell held between $ 1.25 and $ 2.5 million in municipal bonds, a small portion of his total reported assets.
The bonds were purchased before 2019, but were held last year while the Fed bought more than $ 5 billion in munis, including one from the state of Illinois purchased by his family trust in 2016.
Federal Reserve Chairman Jerome Powell (pictured in 2021) has ordered a thorough review of the ethics rules governing financial holdings and transactions by senior U.S. central bank officials. He has now been named by CNBC as one of the top executives who owned similar municipal bonds
Last year, Robert Kaplan (pictured left in 2017), chairman of the Dallas Federal Reserve, traded millions of dollars in shares in companies including Apple, Amazon and Google. Eric Rosengren (pictured right in 2019), chairman of the Boston Fed, has traded stocks and real estate investment trusts, according to financial disclosure forms
Thomas Barkin (pictured in 2019), chairman of the Richmond Fed, held millions of individual corporate bonds, including shares of Coca-Cola, Pepsi, Home Depot and Eli Lilly last year, but did reported little or no business activity last year
In 2020, Robert Kaplan, chairman of the Dallas Federal Reserve, traded millions of dollars in stocks in companies like Apple, Amazon, and Google.
Eric Rosengren, chairman of the Boston Fed, has traded stocks and real estate investment trusts, according to financial disclosure forms.
Its holdings at the end of last year were much smaller than Kaplan’s, but included shares of Chevron, Pfizer, Phillips 66 and several real estate investment trusts.
The two pledged last week to divest the holdings after they were reported by The Wall Street Journal.
Thomas Barkin, chairman of the Richmond Fed, held millions of individual company bonds, including shares of Coca-Cola, Pepsi, Home Depot and Eli Lilly before last year, but reported little or no no commercial activity. Barkin declined to comment.
While none of the executives’ holdings or transactions appear to violate the Fed’s code of conduct, it raises questions about conflicts of interest and surveillance policies.
Comments made by regional Fed chairmen can shake up the markets and they have a role to play in the Fed’s interest rate policies.
These senior officials often have exclusive access to discussions on upcoming policy changes that could benefit or harm certain economic sectors, although they are prohibited from negotiating on this knowledge and cannot negotiate in the lead-up to meetings. from the Fed.
Kaplan and Rosengren both said last week that their transactions were permitted under the Fed’s ethics rules, and there is no indication that either broke the law.
But they also said they would sell their holdings at the end of this month and put the money into index funds, which track a wide range of stocks, or cash.
Yet the transactions took place last year when the Fed took extraordinary steps to support the U.S. economy and stabilize financial markets during the pandemic by expanding the types of assets it would buy.
Massachusetts Senator Elizabeth Warren (seen above on Capitol Hill on Tuesday) was one of many high-ranking lawmakers who demanded tighter restrictions on public officials holding stock options.
The revelations, originally reported by The Wall Street Journal, prompted senior U.S. lawmakers – including Senator Elizabeth Warren of Massachusetts – to demand tighter restrictions on such activity.
“Because the confidence of the American people is essential for the Federal Reserve to effectively carry out our important mission, President Powell asked board staff late last week to take a fresh and comprehensive look on the rules of ethics concerning the participations and the financial activities authorized by the senior executives of the Fed. officials, ”the statement read.
“The controversy over asset trading by senior Fed staff shows why there is a need to ban the ownership and trading of individual stocks by senior officials who are supposed to serve the public interest,” the letter reads. by Warren.
Warren introduced legislation that would prohibit the holding of shares by members of Congress, Cabinet secretaries and other senior officials.
The revelation of Powell’s individual titles comes as he is under consideration for a reappointment as Fed chief.