Fed lays out new trading rules for policymakers, senior staff
New restrictions come weeks after 2 regional Fed presidents resigned over trading activity
Former Kansas City Fed president on economy, inflation
Former Kansas City Federal Reserve President and CEO and former FDIC Vice Chairman Thomas Hoenig on supply issues, inflation, the Federal Reserve and the Biden administration.
The Federal Reserve on Thursday announced sweeping new trading rules for policymakers and senior staff in order to prevent the appearance of a conflict of interest.
The new restrictions will prohibit the employees from buying individual stocks, holding investments in individual bonds or agency securities and entering into derivatives.
They will also have to provide 45 days' notice before buying or selling securities, receive prior permission to conduct transactions and hold investments for at least one year. No transactions will be allowed during periods of heightened market volatility.
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"These tough new rules raise the bar high in order to assure the public we serve that all of our senior officials maintain a single-minded focus on the public mission of the Federal Reserve," said Federal Reserve Board Chairman Jerome Powell.
The announcement comes hours after Sen. Elizabeth Warren, D-Mass., asked Powell to release an email that was sent to officials on March 23, 2020, cautioning them to avoid trading for their personal accounts while the central bank moved to rescue the economy in the early days of the pandemic.
The existence of the email was reported by The New York Times, citing a person who saw the message.
Last month, two regional Fed heads, Robert Kaplan, president of the Federal Reserve Bank of Dallas, and Eric Rosengren, president of the Federal Reserve Bank of Boston, announced their retirements after financial disclosures showed they bought and sold stocks while the Federal Reserve came to the rescue of the U.S. economy in March 2020.
Neither man broke any rules, but the trades caught the attention of lawmakers who noted there appeared to be a conflict of interest. Rosengren officially retired due to health concerns.
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Earlier this week it was reported that Powell last year sold up to $5 million of stock before the market slid nearly 6% in October. Like his colleagues’ transactions, Powell’s did not break any rules.