Washington The American Senator Elizabeth Warren has asked the US Securities and Exchange Commission to investigate the trading activities of high-ranking central bankers. In a letter to the SEC, Democrat Warren also named Fed Vice President Richard Clarida, who, according to media reports, switched from bonds to stocks in February 2020. Clarida adjusted its portfolio the day before an important announcement from Fed chairman Jerome Powell. Powell warned of the risks posed by the coronavirus and promised a response from the Fed if necessary.
Reports on Fed officials’ financial activity are likely to raise serious questions about potential conflicts of interest, Warren wrote. If the activities were based on the Fed officials’ knowledge that it was market moving and non-public, it could have been illegal. An SEC spokesman declined to comment.
After two US central bankers resigned in the wake of a financial scandal, Powell announced in Congress at the end of September that the ethics rules for monetary watchdogs would be completely overhauled. The background to this is the departure of two central bankers who had carried out share transactions for their own account during the peak of the Corona crisis. The two monetary watchdogs represent their respective central bank districts in the Fed’s Open Market Committee, which decides on interest rate policy.
On the one hand, there is the US Federal Reserve Banker Robert Kaplan, who took his hat off as a consequence of the debate about personal stock deals. In addition, the President of the Fed in Boston, Eric Rosengren, announced his resignation for health reasons. He too had come under pressure because of controversial stock deals.
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The financial transactions of the two central bankers were not objected to in an internal audit. However, according to the Fed’s rules, the monetary authorities are required to avoid even the appearance that they could use their position for personal gain. In the Corona year 2020, the Fed had stabilized the markets and the economy with billions of dollars with unprecedented rescue operations. The resignations come at a time when US President Joe Biden should soon decide whether Fed Chairman Powell should have a second term or his time at the helm of the Fed ends in February 2022.
A Fed spokesman announced on Monday that the US Federal Reserve was already in talks with its internal supervisor to initiate an independent investigation into the financial activities of central bankers.
More: Tighten monetary policy to counter inflation – or wait so as not to stall the economic recovery? Both ways involve high risks.