Federal Reserve Chair Jerome Powell has been named as one of the top officials owning and trading the same type of individual securities the Fed itself was buying during the pandemic last year.
Powell ordered a sweeping review of the ethics rules governing financial holdings and dealings by senior officials at the US central bank after Fed presidents sold millions in stock options last year.
Now the chief of the Fed himself has been reported to have owned the same type of municipal bonds that were purchased by the Fed, according to CNBC.
According to CNBC, Powell held between $1.25 million and $2.5 million of 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 Chair Jerome Powell (pictured in 2021) has ordered a sweeping review of the ethics rules governing financial holdings and dealings by senior officials at the US central bank. 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), president of the Dallas Federal Reserve Bank traded millions of dollars in stock in companies such as Apple, Amazon, and Google. Eric Rosengren (pictured right in 2019), president of the Boston Fed, traded in stocks and real estate investment trusts, according to financial disclosure forms
Thomas Barkin (pictured in 2019), president of the Richmond Fed, held millions in individual corporate bonds including shares of Coca-Cola, Pepsi, Home Depot, and Eli Lilly last year but reported little to no trading activity last year
In 2020, Robert Kaplan, president of the Dallas Federal Reserve Bank traded millions of dollars in stock in companies such as Apple, Amazon, and Google.
Eric Rosengren, president of the Boston Fed, traded in stocks and real estate investment trusts, according to financial disclosure forms.
His holdings at the end of last year were much smaller than Kaplan’s but include shares of Chevron, Pfizer, Phillips 66, and several real estate investment trusts.
Both pledged last week to divest those holdings after they were reported by The Wall Street Journal.
Thomas Barkin, president of the Richmond Fed, held millions in individual corporate bonds including shares of Coca-Cola, Pepsi, Home Depot, and Eli Lilly before last year but reported little to no trading 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 conflict of interest and oversight policies.
Comments made by Fed regional presidents can move markets and they have a hand in the Fed’s interest rate policies.
Such high-placed officials often have exclusive access to discussions about upcoming policy shifts that could benefit or be detrimental to some economic sectors, though they are prohibited from trading on that knowledge and are unable to trade in the period leading up to Fed meetings.
Both Kaplan and Rosengren said last week that their trades were permitted under the Fed’s ethics rules, and there is no suggestion that either has broken the law.
But they also said they would sell their holdings the end of this month and place the money in index funds, which track a wide range of securities, or in cash.
Still, the trades occurred last year when the Fed took extraordinary steps to buoy the US economy and stabilize financial markets during the pandemic by widening the types of assets it would purchase.
Senator Elizabeth Warren of Massachusetts (seen above on Capitol Hill on Tuesday) was one of several senior lawmakers who demanded more stringent restrictions on public officials holding stock options
Those revelations, originally reported by The Wall Street Journal, prompted senior US lawmakers – including Senator Elizabeth Warren of Massachusetts – to demand more stringent restrictions on such activities.
‘Because the trust of the American people is essential for the Federal Reserve to effectively carry out our important mission, Chair Powell late last week directed Board staff to take a fresh and comprehensive look at the ethics rules around permissible financial holdings and activities by senior Fed officials,’ the statement said.
‘The controversy over asset trading by high-level Fed personnel highlights why it is necessary to ban ownership and trading of individual stocks by senior officials who are supposed to serve the public interest,’ Warren’s letter said.
Warren has introduced legislation that would bar stock ownership by members of Congress, Cabinet Secretaries, and other high-ranking officials.
The revelation of Powell’s individual securities comes as he is under consideration for reappointment as Fed chief.