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Fed under pressure: ‘the ethics need to be as strong as the economics’


Faced with one of the biggest reputational crises in its history, the Federal Reserve is under pressure to overhaul its ethics guidelines and eliminate virtually all active trading by US central bank officials.

US lawmakers, former Federal Reserve employees and ethics experts are calling for more stringent restrictions following revelations that a handful of senior policymakers were active participants in financial markets while the central bank was using its full firepower to mitigate damage from the coronavirus pandemic.

Two regional Fed presidents, Robert Kaplan from Dallas and Eric Rosengren from Boston, resigned after their trading activity came to light, and Elizabeth Warren, Democratic senator from Massachusetts, has urged the Securities and Exchange Commission to open up an inquiry.

She has also questioned transactions by Richard Clarida, Fed vice-chair, which included the transfer of up to $5m from a bond fund to a stock fund just a day…

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