The Washington Post

Powell orders review of ethics rules at Fed

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Federal Reserve Chair Jerome H. Powell has ordered a sweeping review of the ethics rules governing financial holdings and dealings by senior officials at the U.S. central bank, a Fed spokespers­on said Thursday.

Powell ordered the review late last week, the spokespers­on said in an emailed statement, following recent reports that two of the Fed system’s 12 regional reserve bank presidents had been active investors during 2020, a notably volatile year for asset prices as the country battled the coronaviru­s pandemic. Those revelation­s, originally reported by the Wall Street Journal, prompted senior U.S. lawmakers, including Sen. Elizabeth Warren (D-mass.), to demand more stringent restrictio­ns on such activities.

The rules that guide personal financial practices for Fed officials are the same as those for other government agencies, the spokespers­on said. Moreover, the Fed has supplement­al rules that are stricter than those for Congress and other agencies that are specific to its work.

Following news reports on their trading last week, Dallas Fed President Robert Kaplan and Boston Fed President Eric Rosengren said they would divest any holdings of individual stocks by Sept. 30 and put the proceeds into index funds or cash.

Their investment­s were judged by in-house ethics officers to have complied with Fed ethics rules.

Still, their activity drew a sharp reaction given the context of a pandemic year when tens of millions faced joblessnes­s and the economy was on the precipice of a threatened depression.

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