Ethics-challenged Federal Reserve presidents pledge to sell their stock holdings
The power the U.S. Federal Reserve has over domestic and foreign capital markets is unquestionable. That power made the news that Federal Reserve bank residents were making big trades in their personal stock and bond portfolios all the more bizarre.
The outrage was swift, and so was the reaction:
The presidents of the Federal Reserve banks of Boston and Dallas said they are selling their individual stock holdings by Sept. 30, in moves aimed at quenching ethical concerns over their trading activity last year.
Boston Fed chief Eric Rosengren and Dallas Fed’s Robert Kaplan released near-identical statements Thursday after their most recent financial disclosure documents showed active trading in a range of investments during a year in which the central bank took sweeping policy actions to protect the U.S. economy from Covid-19.
They both said they’d invest the proceeds of their sales in diversified index funds or hold them in cash.
“While my personal saving and investment transactions have complied with the Federal Reserve’s ethics rules, I have decided to address even the appearance of any conflict of interest by taking the following steps,” Rosengren said in a statement.
Kaplan echoed Rosengren’s comments. Both pledged to not trade stocks for the duration of their tenures as reserve bank presidents.
Good. But the reputation damage has already been done. Though to be fair, the Fed’s major lapse is small beans compared to the stock jockeys in Congress.