Two senior Federal Reserve staffers reported a series of financial trades as the central bank was putting in place historic levels of stimulus to prop up the economy at the onset of the Covid-19 pandemic in 2020, The Wall Street Journal first reported, as scrutiny around stock trading by government officials continues to build.
Two central bank staffers bought and sold individual company stocks, mutual funds and other investments in early 2020, as the Federal Reserve began providing a massive amount of stimulus to prop up the economy amid the Covid-19 pandemic.
John Stevens and Diana Hancock, both senior associate directors in the central bank’s research and statistics division, reported in disclosure forms a series of trades in February and March 2020, according to filings reviewed by The Wall Street Journal.
The Federal Reserve, for its part, said the two staffers were compliant with both government rules and the Fed’s internal guidelines, adding that some of the trades were made by family members.
The trades came when pandemic shutdowns sent the U.S. economy into a recession and just as Federal Reserve chairman Jerome Powell announced the central bank would begin providing an historic level of monetary stimulus to help prop up markets.
Stevens reported a whopping 46 financial trades in late February 2020, while Hancock bought and sold shares of an iShares ETF and chipmaker Advanced Micro Devices around that same time.
Stevens said that he didn’t direct the trading listed on his disclosure form, which was tied to a spouse’s inheritance, while Hancock said the iShares and AMD trades were made by her spouse and she had no control over those trades.
Stock trading by government officials has faced growing scrutiny in recent months amid widespread concerns about officials being able to trade on nonpublic information. Within the Federal Reserve alone, three top policy makers have resigned since last September amid news reports about their financial trades during the market volatility in 2020. Former Dallas Fed President Robert Kaplan and former Boston Fed President Eric Rosengren both announced early retirements last fall after the trades were brought to light. Former Fed vice chairman Richard Clarida, meanwhile, also resigned early last month, following questions over financial transactions he also conducted at the onset of the pandemic.
What To Watch For:
Senator Elizabeth Warren (D-Mass.) is one of the most vocal politicians calling for more oversight, recently asking the Securities and Exchange Commission to investigate what she said was potentially illegal trading at the Federal Reserve. Other Democrats have meanwhile tried to implement new laws that restrict financial trading by members of Congress and judges. There is now growing bipartisan support to bar members of Congress from trading individual stocks, with pressure mounting from both rank-and-file Democrats and Republicans in both chambers.
“I asked the inspector general to do an investigation, and that is out of my hands,” Fed chairman Powell said at a news conference last month when asked about the trades made by top officials. “I play no role in it. I seek to play no role in it.”
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