The United States Federal Reserve is also reviewing the code of conduct that governs the handling of financial transactions and the activities of its executives in the wake of the recent revelations that two Fed presidents have done business in the past year.
Robert Kaplan, President of the Dallas Federal Reserve Bank, in 2020 sold millions of products to companies such as Apple, Amazon, and Google, while Eric Rosengren, President of the Boston Fed, traded in stocks and real estate, according to disclosure forms. They all promised last week that they would split the site after the Wall Street Journal reported.
The comments made by the Federal president of the Fed could move the markets and have a stake in the Fed’s interest rates. Such officials often have the opportunity to negotiate upcoming negotiations that could benefit or undermine other sectors of the economy, even though they are prohibited from selling this information and may not be able to trade long before Fed meetings.
Kaplan and Rosengren said last week that their trade was licensed under Fed regulations. But he also said he would sell what he has at the end of this month and put the money in the index money, which manages more security, or cash.
However, the trade took place last year when the Fed took dramatic steps to boost the US economy and establish markets for the epidemic. The central bank reduced its long-term interest rate to zero in March 2020 and has since bought billions of dollars from Treasury shares and mortgage lending institutions to keep long-term interest rates low.
The implications of this trend have been making the stocks more attractive than the bonds, which offer a much lower interest rate when you have a lower interest rate. The economy has been criticized for increasing economic inequality by raising the price of stocks.
The Fed’s purchase of mortgage-backed loans, offered by creditors such as Fannie Mae and Freddie Mac, was criticized by some local bank presidents for helping raise house prices last year. One of the money Rosengren made was to sell real estate to Annaly Capital Management, which also bought the same securities.
In a statement issued Thursday, the Fed said chairman Jerome Powell at the end of last week had called for “a re-examination of the financial and ethical code of conduct by Fed officials”.
The remarks came after letters were sent Wednesday by Senator Elizabeth Warren, a Massachusetts Democrat, to all 12 Fed banks in the region, urging them to ban ownership of shares and officials.
“The debate over the sale of goods to people with high Fed positions shows why it is important to restrict ownership and sale of shares with officials who are supposed to help the public,” Warren’s letter said.
Warren has enacted laws that would restrict the use of pets by members of Congress, Cabinet secretaries, and other officials.
Under Fed pressure, 12 regional banks are listed as secretive entities but are managed by the Federal Reserve in Washington, called the Board of Governors. Local banks have their own systems, although they are very similar to the rules governing the Fed.
The Board of Governors follows the same rules when it comes to selling and selling like other state-owned enterprises, and also follows other laws “that are tougher than those used in Congress and other agencies”, the Fed said Thursday.
Fed regulators, for example, cannot deposit money in banks, most of which are controlled by the Fed. They are also prohibited from trading for ten days before any Fed meeting before being held for a minimum of 30 days.
Kaplan worked for 23 years at Goldman Sachs before joining Harvard Business School in 2006. He later became President of the Dallas Fed in September 2015. Government explanatory forms allow officials to donate what they have, so specific facts are not available.
But by the end of 2020, Kaplan had at least $ 1m worth of $ 24m in cash, including Apple, Chinese e-commerce company Alibaba, Boeing, DRM, Facebook, and Johnson & Johnson. He also had a stake in the Kansas City Royals baseball team worth $ 1m.
Rosengren started working for the Boston Fed as a treasurer in the research department in 1985 and has been President since 2007. His assets at the end of last year were much lower than those of Kaplan but included DRM shares, Pfizer, Phillips 66, and several other stocks.