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Laffer Tengler Investments CIO Nancy Tengler and Wuill Intelligence LLC CEO Danielle DiMartino Booth discuss Federal Reserve Chairman Jerome Powell’s press conference on “Make Money”
Federal Reserve Chairman Jerome Powell said on Wednesday that the US central bank’s current rules dictating what its officials are allowed to invest and trade in were “not adequate” and should be updated after recent revelations have shown that two Fed officials actively traded the markets in 2020.
Powell’s comments come after recent revelations that two of his colleagues – Robert Kaplan, chairman of the Federal Reserve Bank of Dallas, and Eric Rosengren, chairman of the Federal Reserve Bank of Boston – bought and sold stocks and assets. real estate linked last year as the central bank took aggressive action to support the economy.
“We need to make changes, and we will do it accordingly,” Powell told reporters following the Fed’s two-day meeting to set policy. “No one is happy with this.”
Kaplan has traded millions of dollars in stocks in companies including Apple, Amazon and Google, while Rosengren trades stocks and real estate investment trusts, according to financial disclosure forms. Both men defended their actions, but pledged to sell their stakes to avoid the appearance of a conflict of interest.
MOM OF THE WHITE HOUSE ON POWELL FED RENEWAL
“We fully understand that the confidence of the American people is essential for us to carry out our mission,” Powell said Wednesday. “He is now clearly seen as inadequate for the job of truly maintaining the public’s trust in us.”
Still, some advocates want the Fed to take further action beyond an internal review and a promise to update stock trading rules. In a letter last week to the 12 regional Fed banks, Senator Elizabeth Warren, D-Mass., Called for a complete ban on stock ownership by senior officials.
“The controversy over asset trading by senior Fed staff shows why it is necessary to ban the ownership and trading of individual stocks by senior officials who are supposed to serve the public interest,” he said. -she writes.
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As part of the complex structure of the Fed, the 12 regional banks are licensed as private organizations but are overseen by the board of directors of the Federal Reserve in Washington, known as the Board of Governors. Regional banks have their own codes of conduct, although they are largely identical to the rules that govern the Fed’s board of directors.
The Board of Governors follows the same investment and trading rules as other government agencies, but also follows additional rules “more stringent than those that apply to Congress and other agencies,” the Fed said recently. .
Fed officials, for example, cannot invest in banks, many of which are overseen by the Fed. They are also prohibited from trading for a period of approximately 10 days prior to each Fed meeting and are not expected to hold a security for less than 30 days.
The Associated Press contributed to this report
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