The Federal Reserve’s inspector general will be conducting an investigation into the stock and bond trades of senior Fed officials to see if ethics laws were broken.

According to CNBC, a Fed representative said:

“As part of our comprehensive review, we began discussions last week with the Office of Inspector General for the Federal Reserve Board (OIG) to initiate an independent review of whether trading activity by certain senior officials was in compliance with both the relevant ethics rules and the law…“We welcome this review and will accept and take appropriate actions based on its findings.”

Two regional Fed bank presidents resigned after news of their trades – made public on required disclosure forms – hit the news. The Fed’s vice chairman, Richard Clarida, is the latest high ranking Fed official to come under scrutiny. Clarida, through a Fed representative, insists the trades were vetted and acceptable:

Clarida’s trades “were executed prior to his involvement in deliberations on Federal Reserve actions to respond to the emergence of the coronavirus and not during a blackout period,” a Fed spokesman [said]. “The selected funds were chosen with the prior approval of the Board’s ethics official.”

Again, it’s not what’s illegal that makes Washington an endless source of frustration and ire. It’s what is deemed legal and ethical. Changes to how Fed senior officials handle their personal portfolios are inevitable. Repairing the self-inflicted reputation damage? That’s going to take a lot more than new rules and an inspector general’s report.