FED Officials' Personal Monetary Records

Weekly media reports said that two of the Fed’s 12 regional bank presidents frequently traded, which caused some of the most outspoken critics of the Fed to question the rules that allowed them to trade in the first place. Earlier, the Wall Street Journal and Businesshala reported that Kaplan, president of the Federal Reserve Bank of Dallas, and Rosengren, president of the Federal Reserve Bank of Boston, conducted frequent or substantial transactions in 2020.

In the year they were trading, the new crown epidemic hit the U.S. economy and financial markets, and the Fed took large-scale actions to support the economy and financial markets. Although these transactions are permitted under the ethics of the Federal Reserve System, the disclosure of the transactions prompted some observers and a high-level congressman to point out that there may be conflicts of interest.

These changes occurred after both of them were criticized for last year’s deal. The Wall Street Journal first reported these transactions in recent days.  Since then, both of them have disclosed their annual financial disclosure information. The documents show that Kaplan bought and sold at least $18 million in individual stocks in 2020, mainly technology stocks such as Apple and Amazon and energy stocks such as Marathon Petroleum. Dallas Federal Reserve spokesperson James Hoard said that all these transactions had been reviewed by the Dallas Federal Reserve’s general counsel.

Rosengren has publicly expressed concerns about potential overvaluation risks in the commercial real estate sector, but according to Businesshala, he holds shares in four real estate investment trusts and has conducted other investment transactions. Fed officials are subjected to specific restrictions, like not disseminating policy-sensitive information during the “silent period” before and after each Fed meeting; not holding bank stocks or mutual funds that focus on the financial sector; and after purchasing securities, No resale within 30 days. But the wording of the code of conduct refers to a broader scope.

This financial disclosure does not look significantly different from previous years.  But 2020 is a landmark year for the Fed.  According to the Fed’s statement, to ensure that financial markets continue to function, the Fed has crossed the “red line”. In a rapid response to the spread of the epidemic, Fed policymakers reduced interest rates to near zero in March 2020 and launched plans to keep the U.S. Treasury, mortgage-backed securities, and corporate bond markets functioning smoothly. Individuals from different walks of life applauded Fed’s quick actions for helping financial markets avoid a more severe collapse. Fed officials said this achievement helped minimize the impact on the economy. Some Fed observers say that it may be time to review these rules.