Warren Calls On Federal Reserve Banks To Adopt Stricter Ethics Rules After Troubling Reports Of Stock, REIT Trading By Two Fed Presidents
Warren Introduced The Anti-corruption And Public Integrity Act; She Has Long Called For An End To Stock Trading And Ownership By High-Ranking Government Officials And Members Of Congress
WASHINGTON, D.C. — Following troubling reports that two regional Federal Reserve Bank (Fed) Presidents made extensive stock trades in 2020 as the Fed took extraordinary actions to address the COVID-19 pandemic, United States Senator Elizabeth Warren (D-Mass.), chair of the Senate Banking, Housing, and Urban Affairs Subcommittee on Economic Policy, called on the 12 regional Fed Presidents to adopt stricter ethics rules that prohibit individual stock trading by them and their staff. Last week, reports emerged that Robert Kaplan, President of the Federal Reserve Bank of Dallas,“made multiple million-dollar-plus stock trades in 2020….(involving) some combination of sales or purchases of over $1 million in 22 individual company shares or investment funds.” Meanwhile, Eric Rosengren, President of the Federal Reserve Bank of Boston, “listed stakes in four separate real estate investment trusts and disclosed multiple purchases and sales in those and other securities.” Although Kaplan and Rosengren pledged to sell their individual stock holdings and no longer trade individual stocks amid widespread backlash, their actions raise serious concerns about the perception of conflicts of interest and potential self-dealing by Fed officials.
Senator Warren — who has championed tighter ethics rules that prohibit all government officials from holding or trading stock that may be influenced by their agency, department, or actions — is urging the regional Fed presidents to make personal commitments to impose a ban on the ownership and trading of individual stocks by senior Fed officials and strengthen enforceable ethics and financial conflicts of interest rules for themselves and their staff.
“This controversy over asset trading by high-level Fed personnel highlights why it is necessary to ban ownership and trading of individual stocks by senior officials who are supposed to serve the public interest,” said Senator Warren. “Regional Fed leaders must ban the ownership and trading of individual stocks by senior officials, and impose strong and enforceable ethics and financial conflicts of interest rules for themselves and their staff to restore public trust. At a minimum, these rules should reflect the robust and comprehensive guidelines in my Anti-Corruption and Public Integrity Act. Instating critical ethics rules will send a clear and necessary message to the American people about the importance of government ethics and the integrity of Fed officials.”
Senator Warren first introduced the bicameral Anti-Corruption and Public Integrity Act in 2018 to tighten conflict of interest and recusal requirements, and shut the revolving door between industry and government. The sweeping ethics legislation would ban individual stock ownership by Members of Congress, Cabinet Secretaries, senior congressional staff, federal judges, White House staff, and other senior agency officials while in office. It would also prohibit all government officials from holding or trading stock where its value might be influenced by their agency, department, or actions. Additionally, the bill would require senior government officials and White House staff to divest from privately owned assets that could present conflicts, including large companies and commercial real estate.
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