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The recent scandal caused the departure of two regional presidents and weakened confidence in the U.S. Central Bank.
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Published on October 21, 2021
The Fed will prohibit policymakers and other senior officials from buying individual stocks and bonds, and restrict active trading after an ethics scandal causes the departure of two regional presidents and weakens confidence in the central bank.
The Fed said in a statement on Thursday that under the new policy, senior Fed officials including regional bank governors, Washington governors and senior staff will be limited to purchasing diversified investment vehicles such as mutual funds.
Other rules that “help prevent any conflict of interest at the timing of investment decisions” include 45 days’ notice to buy and sell securities, obtain prior approval for such transactions, and hold investments for at least one year. In addition, “during a period of increased financial market pressure, buying and selling is not allowed,” the Fed said.
Federal Reserve Chairman Jerome Powell said in a statement: “These strict new rules raise the bar to assure the public we serve that all our senior officials are single-mindedly focused on the public mission of the Federal Reserve.”
The Federal Reserve stated that it will require 12 regional Fed presidents to publicly disclose financial transactions within 30 days. This policy has already been applied to governors and senior staff in Washington.
The announcement came after Powell ordered a system-wide review of the ethics rules and asked the Fed Inspector General to review the transactions of “certain senior officials.”
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