Exclusive-Fed bank chiefs, in letter to Senator Warren, pledge to comply with ethics review

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(Businesshala) – U.S. Federal Reserve regional bank presidents welcomed a review of the matter by the Fed’s board of governors with a joint letter responding to Democratic Senator Elizabeth Warren’s criticism of their ethics rules and seeking to make any changes as a result of that process. promised. .

FILE PHOTO: The Federal Reserve building is set against a blue sky in Washington, US, May 1, 2020. Businesshala / Kevin Lamarck / FILE PHOTO

“Recently, Federal Reserve Chairman Jerome Powell has directed staff on the Board of Governors to conduct a comprehensive review of ethics rules regarding permissible financial holdings and activities by senior Federal Reserve officials,” the presidents said as seen by Businesshala. According to a copy of the letter said. . “We welcome this important review and will implement the resulting changes to each Federal Reserve Bank’s code of conduct.”

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The short letter, dated September 20, was written by St. Louis Fed President James Bullard on behalf of all banks and signed by each bank president.

Earlier in September, Warren wrote to banks asking them to tighten their ethical rules, which include restrictions on the ownership and trading of individual shares by senior Fed officials. The letter in reply made no mention of the ban on such trade within 60 days as requested by it.

Warren’s letter was followed by an uproar over the trading activities of Dallas Fed Chairman Robert Kaplan and Boston Fed Chairman Eric Rosengren, who last year made controversial investments by the central bank to shore up the economy. Both announced last month that they would step down from their positions despite the Fed’s ethics officers having cleared their trades.

Powell has since ordered a comprehensive review of the ethics rules governing financial holdings and transactions at the central bank. He has also asked the Fed’s office of inspector general to look into trades made by some senior officials.

It has done little to please Senate Banking Committee member Warren, who would consider Powell if President Joe Biden nominates him as Fed chair. Powell’s current term ends in February.

Two weeks ago he said he opposed his nomination, calling him a “dangerous man” who repeatedly voted to control Wall Street and pursued his lead on issues of clear morality at the central bank.

On Thursday, Warren made it clear in response to a letter from regional Fed chiefs that she expected stricter ethical guidelines from them.

“Every Fed official should know that there is also no room for the appearance of self-deprecating,” she said in an email to Businesshala. During the remainder of Powell’s term, he said, “he should make strict moral rules based on my Anti-Corruption and Public Integrity Act.”

Reporting by Lindsey Dunsmuir, Ann Saffir and Jonelle Marte; Editing by Andrea Ricci

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