In response to growing controversy over investment practices, the Federal Reserve Board announced on Thursday a broad ban on officials holding individual stocks and bonds and restrictions on other activities.
The ban includes top policy makers and senior staff, including members of the Federal Open Market Committee. Future investments should be limited to diversified assets such as investment trusts.
The Federal Reserve Board is no longer able to hold shares in a particular company, invest in individual bonds, or hold government securities or derivative contracts. The new rules will replace existing rules that allowed officials, such as the president of the region, to buy and sell shares, albeit with some restrictions.
“These strict new rules focus on the people we serve and all senior officials on the official mission of the Federal Reserve Board,” Jerome Powell, chairman of the Federal Reserve Board of Governors, said in a statement. We will raise the standard to ensure that we continue to meet. “
Under the new rules, authorities must notify 45 days in advance before buying or selling securities that are still permitted. He also said he had to hold securities for at least a year and couldn’t buy or sell money while “financial market stress was rising,” a news release announcing the move.
“We hope that swift action will allow us to put this off and focus on our previous work,” said Raphael Bostic, president of the Federal Government of Atlanta.Closing bell” interview.
The rule follows disclosure that multiple Fed officials were buying and selling shares during a period when central bank policy was designed to improve market functioning, especially during the Covid-19 crisis.
Since the early days of the pandemic, the Fed has bought over $ 4 trillion in bonds to strengthen its economy through liquidity and low interest rates. We also bought billions of dollars in corporate bonds from a major Wall Street company to ensure market functioning.
Dallas Regional President Robert Kaplan and Boston’s Eric Rosengren Resign immediately after disclosure In the case of Kaplan, the move occurred with a large allocation.
Vice Chairman Richard Clarida was also featured in the report. Powell also sold securities last year, but they were exchange-traded funds that tracked market indexes. The chair also owns municipal bonds purchased by the Fed as part of a bailout.
“It’s probably a wise move because it’s problematic to distinguish between real insider trading and regular trading that appears to be using insider information,” said George Selgin, Honorary Director of Financial Centers. He said. Financial alternatives at the Cato Institute.
According to the announcement, the regional president must disclose the transaction within 30 days. This is a requirement that has already been applied to FOMC members and senior staff. According to the release, the new rules will be officially incorporated for “one month”. The schedule has not been announced, but the current holdings will need to be sold.
“The optics are bad,” Sergin said of previous federal rules. “They needed such a rule. I don’t think we need to feel sorry for them. They will do well enough with this restraint properly.”
These new rules will cause the federal ethics office to send an email to officials warning about the transaction in March 2020 as the pandemic worsens and central bank officials are deploying a series of emergency measures. Following a new disclosure from the New York Times that it did.
Senator Elizabeth Warren, D-Mass. A federal critic, who said she did not support Powell, said that if he was nominated for a second term called Thursday for the public release of the email, Reported Times..
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Supplied to ban policy makers from owning individual shares and restrict post-controversial transactions
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