Jerome Powell says central bank will make changes to trading rules

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Chairman of the Federal Reserve Jerome Powell said on Wednesday that the central bank’s current trade rules were insufficient and promised it would “make changes” after documents showed officials were trading stocks and bonds that could be influenced by its political actions.

Specifically, Powell said Fed officials should, as a general rule, be prohibited from owning assets that the central bank purchases as part of its regular asset purchases and emergency liquidity measures. .

Two weeks ago, financial disclosures filed by the 12 chairmen of the Fed’s regional banks found that some had traded frequently throughout 2020, while others were holding $ 1 million positions without significant changes. in their wallets.

The Fed said Thursday that President Jerome Powell had ordered a “new and comprehensive review of the ethics rules for holdings and financial activities authorized by senior Fed officials.”

Annual portfolio disclosures released over the past month showed the Dallas Fed chairman Robert Kaplan has made several transactions worth $ 1 million or more in 2020 in individual stocks including Apple, Amazon and Delta Air Lines.

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Boston Fed Chairman Eric Rosengren also came under scrutiny as he was revealed to have financial interests in four real estate investment trusts and had made several purchases and sales of owner vehicles. similar.

He also held shares in Pfizer, Chevron and AT&T, with most of his investments worth tens to hundreds of thousands of dollars.

Deposits Richmond Fed Chairman Thomas Barkin disclosed little to no business activity but several financial holdings of over $ 1 million.

The Fed’s regional banks are part of the larger Federal Reserve system, but are fairly autonomous.

Each operates in a specific geographic area, is incorporated separately and has its own board of directors. As such, each regional bank has its own code of conduct.

The Dallas Federal Reserve Bank’s Code of Conduct states that “an employee is prohibited from using non-public information for any purpose other than Bank business. In addition, an employee may not engage, directly or indirectly, in any financial transaction in or based on non-public information, whether such information relates to the Bank or any other person or institution. “

In addition, “An employee with knowledge of FOMC Class I information should avoid engaging in any financial transaction the timing of which could give the impression of acting on the basis of inside information regarding the deliberations and actions of the Federal Reserve. “

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