Fed overhauls trading rules for senior officials amid scrutiny of policymakers' past behavior

[BumRushDaShow]

Source: Washington Post

The Federal Reserve on Thursday announced a major tightening of its rules overseeing the personal financial activities of top officials, responding to mounting pressure around the trading behavior of policymakers while the central bank fought against the covid recession. The new rules prohibit the purchase of individual securities, restrict active trading and ramp up the timeliness of reporting and public financial disclosures by Fed policymakers, as well as senior staff.

Senior Fed officials will now only be allowed to have diversified investment vehicles, like mutual funds, and even those investments will be subject to tighter oversight. “These tough new rules raise the bar high 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,” Fed Chair Jerome H. Powell said in a statement Thursday.

Over the past month, a set of stock trading scandals resulted in two Fed leaders exiting their posts, plus an independent inspector general investigation probing whether the officials’ behavior violated ethics rules and the law. Fed officials said that inspector general investigation is expected to look backward on financial activities from 2020, while Thursday’s announcement is meant to set a new internal Fed rule book moving forward.

The ethics questions have roiled public trust in the Fed at a tricky time in the economic recovery, as inflation is high and progress in the job market has slowed. The stock trading questions have also weighed on the central bank amid looming questions of who the White House will pick to lead the Fed once Powell’s first term expires in February.

Read more: https://www.washingtonpost.com/us-policy/2021/10/21/fed-trading-rules-stock/

[JudyM]

1. Now apply this to Congress.

If only.

[BumRushDaShow]

2. Congress has the STOCK Act

https://www.congress.gov/bill/112th-congress/senate-bill/2038/text

https://obamawhitehouse.archives.gov/the-press-office/2012/04/04/fact-sheet-stock-act-bans-members-congress-insider-trading

But enforcing it is a bit... ahem... touch and go.

https://www.businessinsider.com/congress-stock-act-violations-senate-house-trading-2021-9#rep-tom-malinowski-a-democrat-from-new-jersey-7

[JudyM]

3. So we have to rely on the media for enforcement.

If we ran on (or made inroads on) significantly tightening conflicts of interest in Washington we’d garner votes from masses of disaffected voters in Nov, IMO. We’d be staking out the unequivocally high moral ground on an issue that would have substantial crossover appeal. So what is the downside to doing this? Hm.

[BumRushDaShow]

5. Last year

the Senate Ethics Committee did a review of 4 of them (this was pre-2020 election) and between them and DOJ, the cases were dismissed) -

Senate ethics panel dismisses insider-trading inquiry into Sen. Loeffler

By Colby Itkowitz
June 16, 2020

The Senate Ethics Committee dismissed its investigation into Sen. Kelly Loeffler (R-Ga.) for alleged insider trading ahead of the coronavirus pandemic, notifying her in a letter Tuesday that it found “no evidence” the senator violated the law or Senate rules.

(snip)

Government watchdog groups Citizens for Responsibility and Ethics in Washington and Common Cause filed complaints with the Senate Ethics panel in March accusing Loeffler of violating the Stock Act, which forbids lawmakers from profiting off information they learn in nonpublic briefings.

(snip)

In April, Loeffler announced that she and her husband would liquidate their individual stock shares, not as an admission of wrongdoing, she said, but to avoid the distraction.

(snip)

The Justice Department dismissed similar probes into Sens. James M. Inhofe (R-Okla.) and Dianne Feinstein (D-Calif.), but is still looking into Sen. Richard Burr (R-N.C.) for alleged insider trading.

https://www.washingtonpost.com/politics/senate-ethics-panel-dismisses-probe-into-sen-loeffler-for-insider-trading/2020/06/16/f8ca3196-b01e-11ea-8f56-63f38c990077_story.html

Haven't been able to find any updates on Burr since we obviously had an administration change as well as a change in the Senate control.

[IronLionZion]

4. The $200 penalty is a joke

and is most often waived. They need better penalties for breaking the law while being a fabulously wealthy lawmaker. But they're the ones who make the laws so....I wouldn't hold my breath.

[BumRushDaShow]

6. That pretty much sums it up.