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Fed’s Mester:
She wouldn’t have a problem with Fed reviewing rules on how officials should handle investments
Fed’s Rosengren and Barkin, CNBC reports:
Boston Fed President Eric Rosengren held between $151,000 and $800,000 worth of real estate investment trusts that owned mortgage-backed securities. He made as many as 37 separate trades in the four REITs while the Fed purchased almost $700 billion in MBS.
Richmond Fed President Thomas Barkin held $1.35 million to $3 million in individual corporate bonds purchased before 2020. They include bonds of Pepsi, Home Depot and Eli Lilly. The Fed last year opened a corporate bond-buying facility and purchased $46.5 billion of corporate bonds.
At FOMC
Powell says he was not aware of Kaplan and Rosengren trading (he’s distancing himself from them)
We’re going to gather all the facts and look at ways to further tighten our standards (on trading)There’s no timeline on when the Fed will conclude its review of ethical standards
Update “Fed’s Rosengren, under scrutiny for 2020 trading activity, to retire on Sept. 30”
Said moved up his long-planned retirement by (mths) because of health concerns.
He would have had to retire next June under Fed rules.When Fools Fall… Right on the heals of Boston Fed’s Rosengren & FOMC
… Dallas Federal Reserve President Robert Kaplan is set to retire on October 8th. via @Mayhem4Markets
Powell Powell addresses ethics issues
As soon as learned of regional Fed bank presidents trading, directed staff to undertake a full review
Need to modify our practices and in process of creating recommendations for that
Looking carefully at regional Fed bank president trading to make sure it was in compliance with rules and law
Appearance is unacceptable even if, as appears to be the case, trading was in compliance with rules
Rules, practices and disclosure needs to be improved
The Fed will rise to the moment and address ethics issuesOctober 1 – Bloomberg (Craig Torres): “Federal Reserve Vice Chair Richard Clarida traded between $1 million and $5 million out of a bond fund into stock funds one day before Chair Jerome Powell issued a statement flagging possible policy action as the pandemic worsened, his 2020 financial disclosures show.”
Federal Reserve Board announces a broad set of new rules that will prohibit the purchase of individual securities, restrict active trading, and increase the timeliness of reporting and public disclosure by Federal Reserve policymakers and senior staff
For release at 2:00 p.m. EDT
Following a comprehensive review, the Federal Reserve Board on Thursday announced a broad set of new rules that will prohibit the purchase of individual securities, restrict active trading, and increase the timeliness of reporting and public disclosure by Federal Reserve policymakers and senior staff. As a result of the new policies, senior Federal Reserve officials will be limited to purchasing diversified investment vehicles, like mutual funds.
The new restrictions will apply to both Reserve Bank and Board policymakers and senior staff and prohibit them from purchasing individual stocks, holding investments in individual bonds, holding investments in agency securities (directly or indirectly), or entering into derivatives. The new rules are expansive and are designed to place the Federal Reserve’s investment and trading rules at the forefront among major federal agencies.
“These tough new rules raise the bar high in order to assure the public we serve that all of our senior officials maintain a single-minded focus on the public mission of the Federal Reserve,” said Federal Reserve Board Chair Jerome H. Powell.
To help guard against even the appearance of any conflict of interest in the timing of investment decisions, policymakers and senior staff generally will be required to provide 45 days’ advance notice for purchases and sales of securities, obtain prior approval for purchases and sales of securities, and hold investments for at least one year. Further, no purchases or sales will be allowed during periods of heightened financial market stress.
Reserve Bank presidents now will be required to publicly disclose financial transactions within 30 days, as Board Members and senior staff currently do.
The Board and the Reserve Banks will incorporate these new restrictions into the appropriate Federal Reserve rules and policies over the coming months.
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