Senator Elizabeth Warren, Democrat of Massachusetts, asked the Federal Reserve in a letter sent Monday to reveal more information about a series of financial trades made by several senior officials in 2020, when the Fed was actively supporting the markets.
The Fed has become embroiled in a transaction scandal, which occurred in the months after the unfettered market bailout at the start of the pandemic, raising the possibility that policymakers could benefit financially from the information they had and the decisions they were making. Jerome H. Powell, Fed Chairman, said the trades were problematic and acted quickly to reform the central bank’s ethical rules.
But this did not stop the fallout. Mr. Powell, who has been nominated for a second term as president by President Biden, will almost certainly face questions about the Fed’s ethics dilemma at Tuesday’s confirmation hearing before the Senate Banking Committee. Ms Warren, who sits on that committee, is pressing for more details about the Fed’s trading activity and new ethical rules, according to the new letter, which she sent to Mr. Powell. Ms Warren, who previously asked the Fed to turn over information and documents surrounding the trades, is asking the Fed “to release all available information about the trades” by next Monday.
In her letter, Ms Warren said the central bank had failed to fully respond to her previous requests for information.
Ms. Warren, who has been critical of Mr. Powell’s presidency, said she would not support his re-nomination.
Scrutiny of the 2020 trading intensified after The New York Times reported last week that Richard H. Clarida, Vice President of the Federal Reserve, initially failed to disclose the full extent of his trading in his original financial disclosure. Mr. Clarida revised his disclosures in late December, and the document showed he exited the equity fund as markets slumped during the pandemic. Three days later, he returned to the same fund, before Powell announced that the central bank was ready to bail out the markets.
Ethics experts said the new information raises questions about the central bank’s original interpretation that Mr Clarida’s treatment was Pre-planned rebalancing Far from bonds and toward stocks, they said more information is needed to understand the trades.
Warren wrote that the new information “raises suspicion that the Federal Reserve may fail to disclose the full scope of the scandal to the public.” “I am therefore asking you to respond in full to my request by January 17, 2022.”
Clarida updated his disclosures after noticing “unintentional errors,” a Fed representative said last week, and the Fed’s ethics official said the newly cited trades were “in compliance with applicable laws and regulations governing conflicts of interest.” However, they came under scrutiny because a quick move out of the stock fund and back into it at a time of market turmoil looked less like a rebalancing toward stocks and more like a potential response to market conditions.
“This disclosure is just the latest evidence of a deeply rooted moral failure at the Federal Reserve and the urgent need to release comprehensive information about officials’ business,” Warren wrote.