Federal Reserve Chairman Jerome Powell ordered staff to review ethics guidelines governing the financial dealings by top central bank officials.
News of Powell’s inquiry broke after Sen. Elizabeth Warren, D-Mass., sent 12 letters to the Fed’s regional banks demanding stricter ethics guidelines be implemented by the Fed’s top officials.
The Massachusetts Democrat called on each president to ban the ownership and trading of personal stocks by top officials at each regional bank office.
Powell requested the ethics review late last week, a spokesperson said in a statement, following reports that two regional presidents actively invested during 2020.
A Fed spokesperson told CNBC that Powell ordered the review “because the trust of the American people is essential for the Federal Reserve to effectively carry out our important mission.”
According to documents released last week, Fed Presidents Robert Kaplan and Eric Rosengren both bought or sold private stocks in excess of $1 million dollars. Other Fed presidents reported little to no trading activity.
Amid the public backlash and scrutiny from Congress, both Kaplan and Rosengren said they would sell any individual stock holdings by the end of the month.
Current Fed regulations forbid the trading of individual stocks by senior officials around the time of policy meetings due to the sharing of information that could have significant influence on the nation’s economy.
Powell emphasized that although it is not illegal for regional presidents to buy or sell stocks, the Fed’s internal rules require officials to avoid even the appearance of conflict or of using their position for personal gain.
It is not yet clear how long the ethics review will take.