Federal Reserve presidents respond to criticism of ethics rules

Federal Reserve presidents respond to criticism of ethics rules

Reuters - The Federal Reserve's regional bank presidents responded to criticism of their ethics by Democratic Senator Elizabeth Warren with a joint letter welcoming a review of the matter by the Fed Board of Governors and pledging to make any changes that result from that process.

Recently, Federal Reserve Chairman Jerome Powell directed board of governors staff to conduct a comprehensive review of the ethics rules related to permissible financial holdings and activities by senior Federal Reserve officials, the presidents said, according to a copy of the letter viewed by Reuters. We welcome this important review and will apply any resulting changes to the Federal Reserve Banks Code of Conduct. In September, Warren wrote to the banks asking them to tighten their ethics rules including a ban on the ownership and trading of individual stocks by senior Fed officials.

It followed a furor over the trading activities of Dallas Fed President Eric Rosengren and Boston Fed President Robert Kaplan, who made controversial trades last year as the Central Bank undertook a rescue of the economy. Both announced that their positions would depart last month despite their trades being cleared by the Fed Ethics Officers.

Powell has ordered a wide review of ethics rules for the central bank's financial holdings and dealings. He also asked the Fed's office of the inspector general to look into the trading done by certain senior officials.