Jerome Powell. Pool/ Getty Images
Jerome Powell, Fed Chair, said that he was unaware of the "specifics" behind stock trading decisions made by two top policymakers during his time in office.
In a Wednesday press conference, he avoided saying that he had confidence in Robert Kaplan and Eric Rosengren, the presidents of the Boston Fed in Dallas and Boston.
Powell promised to review Fed rules for officials and said: "We have to make changes, we're going do that as a result of this."
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Federal Reserve boss Jerome Powell said that he was unaware of specific trading activity by two regional Fed Presidents. He declined to support top policymakers who were being questioned about possible conflicts of interest and shrugged off the opportunity to do so.
Powell was asked Wednesday if he still believes that Eric Rosengren, Dallas Fed President, and Robert Kaplan, Boston Fed President will be able to perform their respective jobs.
"In terms confidence and such things, I believe that no one is happy." "No one on the Federal Open Market Committee (Federal Open Market Committee), is happy to have those questions raised," he said in a post-Fed press conference.
The Wall Street Journal first reported financial disclosures that showed Kaplan, Rosengren made multimillion dollar trades in popular stocks like Apple and Tesla. These trades were made as the Fed increased its asset purchases to provide unprecedented support for the US's pandemic-hit economy.
Both expressed regret over their investment decisions, and pledged to get out of debt by the end this month in order to avoid conflicts of interest. Some advocacy groups are calling for the Fed presidents' resignations, claiming that their actions could lead to Americans losing trust in the central banking institution.
Powell stated that he didn't know of the actions of policymakers before media reports about their stock trades.
He said, "I wasn't aware of the details of what they were doing."
Powell pointed out three restrictions that Fed officials already have to follow around securities. First, bank securities are not allowed to be owned. There are certain times, such as during FOMC meetings, when officials are prohibited from trading or buying or selling financial assets. Officials must also make financial disclosures every year.
Powell stated, "This has been our structure for a long while, and I'd guess you'd agree that it's served us well." "The other thing that you would add is that it is no longer adequate to sustain the trust of the public in us.
He said, "We have to make changes and that's what we're going do as a result of this."
Powell said that the Fed would conduct a thoroughgoing, comprehensive review of the Fed's policies and look at ways to tighten standards and rules. Powell promised that he would not give a timeframe or suggest any changes.
Powell stated that he had owned municipal securities for many years, which were purchased by the Fed last year.
Powell claimed that the holdings were a "coincidence" because he didn't expect the Fed to purchase munis to stop a market collapse. He said he isn't active trader and that he had discussed any conflicts with ethics officials.
He stated that Munis were considered to be safe investments because municipal securities are not allowed by law.
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