By Howard Schneider

WASHINGTON (Reuters) – In March 2020, Federal Reserve ethics officials warned Fed policymakers against trading in personal securities as the central bank braced for what has become a massive effort and large-scale campaign to fight the pandemic and prevent the economy and asset markets from collapsing, The New York Times reported on Wednesday.

The Times said it confirmed the substance of a March 23 email from the Fed’s main ethics office, ultimately distributed through the system and to the 12 regional bank presidents, advising against what the Times called unnecessary trading. given the Fed’s response to the developing crisis.

Over the next few weeks, the Fed would launch programs that touched virtually every asset market and even offer credit to individual companies.

The Times report suggested that the bank’s officials charged with enforcing and advising on its internal rules were sensitive to potential conflicts, or at least the appearance of them, that could arise as policymakers debated and voted on programs that would eventually pull the financial markets to the brink of collapse and set the stage for a series of record appreciations.

The Times said the Fed refused to publish the email, but its contents were verified by someone who read it.

The Fed did not immediately respond to a request for comment and release of the underlying document.

Reports on the 2020 trading activity of Dallas Fed Chairman Robert Kaplan and Boston Fed Chairman Eric Rosengren have led to their resignations, and criticism has also been leveled against them. transactions by Fed Chairman Jerome Powell later in the year, in October, and Fed Vice Chairman. Richard Clarida in February, before the coronavirus crisis took hold.

In all cases, officials have said their business complies with rules regarding the types of securities officials can own and the time frames within which they can buy and sell.

The larger question – whether these rules place appropriate restrictions on officials with broad power to influence U.S. markets – has become closely related to the Biden administration’s consideration of Powell for a second term as president. .

(Reporting by Howard Schneider; Editing by Howard Goller)

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