Federal Reserve places new restrictions on stock trading and investing by top officials
Today, ethics watchdog Protect the Public’s Trust lauded moves by the Federal Reserve to strengthen rules designed to prevent potential conflicts of interest. In the wake of a controversy over stock trading by Federal Reserve bank presidents that resulted in two resignations, the Fed added rules to ban individual stock purchases and place other constraints on investment activity by top officials.
Unfortunately, these actions represent a rare example of today’s federal government responding to concerns regarding bias and ethics. While the Federal Reserve’s ability to influence individual companies and economic sectors is unique and was magnified by the economic disruptions of the pandemic, the new rules and the scandal that spurred them underline the necessity for all federal agencies to continually assess and evaluate the ethics restrictions they have in place. Protect the Public’s Trust has identified and highlighted a number of instances of potential conflicts and possible misconduct among high-ranking staff at several agencies, including the Departments of the Interior, Health and Human Services, and Energy and the Environmental Protection Agency. We hope the Fed’s actions are noticed by their colleagues in other agencies.
“The perception that government officials can profit individually from the actions they take at their agencies is a significant reason the American public’s trust in its government is at an all-time low,” Michael Chamberlain, Director of Protect the Public’s Trust, said. “We support the Fed taking steps to help restore that trust but that work is far from over. As we have documented, incidents of high-ranking officials possibly crossing ethical lines have not disappeared and it’s incumbent upon agencies to step up their efforts at self-policing.”