Editor’s note: This story has been updated to fix a minor typo in the fourth paragraph.
Sen. Elizabeth Warren (D-Mass.) has criticized Federal Reserve Chair Jerome Powell for the “long-delayed ethics policy” at the U.S. Central Bank, which she claims “doesn’t fix a thing.”
What Happened: The post on X, formerly Twitter, further emphasizes the need for a strong ethics policy at the Fed, suggesting that the current policy is inadequate in preventing insider trading and holding top officials accountable.
The Massecheustes Senator said that Powell had allowed a “culture of corruption” to fester at the Federal Reserve. She said, “Top Fed officials should not be making trades with inside information – and we need a strong ethics policy to hold them accountable.”
Previously, Sen. Rick Scott (R-Fla.) had raised concerns about the Federal Reserve’s internal trading and investment policy, Bloomberg reported on Saturday. The senators called for a revision of the guidelines for reserve bank employees.
The policy, which was approved in March and posted on the Fed’s website in May, allows internal decisions on what constitutes a “material” violation and the appropriate punishment for such a violation. The senators argue that this “self-policing” nature of the guidelines undermines independent review.
The senators’ criticism comes in the wake of a trading scandal that rocked the Fed in 2021, involving several officials, including former Dallas Fed President Robert Kaplan and Boston’s Eric Rosengren. The scandal led to the tightening of the Fed’s trading rules, and the officials were cleared of legal wrongdoing but were found to have created an “appearance of a conflict of interest.”
Why It Matters: This criticism of the Fed’s new policy follows a series of events that have put the central bank under scrutiny. In March 2023, Senator Warren had publicly criticized the then-Fed Chair Jerome Powell, stating that he had failed in his responsibilities.
In February 2022, the Federal Reserve enacted new rules on the investment and trading activities of its senior leadership, prohibiting them from purchasing individual stocks or sector funds, among other restrictions. The current criticism of the Fed’s internal policy indicates ongoing concerns about the effectiveness of these measures.
Photo by Sheila Fitzgerald on Shutterstock
This story was generated using Benzinga Neuro and edited by Shivdeep Dhaliwal
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