The following report is from CNBC:
Amid an outcry about Federal Reserve officials owning and trading individual securities, an in-depth look by CNBC at officials’ financial disclosures found three who last year held assets of the same type the Fed itself was buying, including Chairman Jerome Powell.
None of these holdings or transactions appeared to violate the Fed’s code of conduct. But they raise further questions about the Fed’s conflict of interest policies and the oversight of central bank officials.
- Powell held between $1.25 million and $2.5 million of municipal bonds. They were just a small portion of his total reported assets. While the bonds were purchased before 2019, they were held while the Fed last year bought more than $5 billion in munis, including one from the state of Illinois purchased by his family trust in 2016.
- Boston Fed President Eric Rosengren held between $151,000 and $800,000 worth of real estate investment trusts that owned mortgage-backed securities. He made as many as 37 separate trades in the four REITS while the Fed purchased almost $700 billion in MBS.
- Richmond Fed President Thomas Barkin held $1.35 million to $3 million in individual corporate bonds purchased before 2020. They include bonds of Pepsi, Home Depot and Eli Lilly. The Fed last year opened a corporate bond-buying facility and purchased $46.5 billion of corporate bonds.
Among those questions: Should the Fed have banned officials from holding, buying and selling the same assets the Fed itself was buying last year when it dramatically widened the types of assets it would purchase in response to the pandemic?
The Fed’s own code of conduct says officials “should be careful to avoid any dealings or other conduct that might convey even an appearance of conflict between their personal interests, the interests of the system, and the public interest.”
In response to CNBC questions asked in the process of our research, a Fed spokesperson released a statement Thursday saying Powell ordered a review last week of the Fed’s ethics rules surrounding “permissible financial holdings and activities by senior Fed officials.”
A Fed spokesperson told CNBC that Powell had no say over the central bank’s individual municipal bond purchases but that the bonds were held in a joint account over which he did have control. He decided not to trade muni bonds in 2019.
Barkin declined to comment but he did not appear to have any say over the individual corporate bonds purchased by the Fed.
Rosengren has announced he would sell his individual positions and stop trading while he is president. Dallas Fed President Robert Kaplan, who actively traded millions of dollars of individual stocks, also said he would no longer trade and would sell his individual positions. But he said his trade did not violate Fed ethics rules.
A spokesman for Rosengren told CNBC that he “made sure his personal saving and investment transactions complied with what was permissible under Fed ethics rules.”
But Dennis Kelleher, CEO of the nonprofit Better Markets, said if some of these Fed actions are not against the rules, the rules need to change.
To think that such trading is acceptable because it is supposedly allowed by Fed’s current policies only highlights that the Fed’s policies are woefully deficient.
Kelleher told CNBC.
While trading by Rosengren and Kaplan was not conducted during the so-called blackout period, when Fed officials are not allowed to talk publicly about monetary policy or trade, Kelleher said during a crisis like last year, “the whole year should be considered a blackout period” because Fed officials are constantly talking and crafting policy in response to fast-moving events.
(CNBC Editor’s notes: This story has been updated to reflect new information. Fed Chair Powell owned the municipal bonds in question in a joint account over which he had control. Due to incorrect information provided by the Federal Reserve, CNBC reported initially that Powell owned the munis in a family trust over which he had no control.)
Correction: The Fed itself bought $5 billion to $6 billion in municipal securities last year. The previous figure used in the story incorrectly included money that came from the Treasury used to buffer against losses.
AUTHOR COMMENTARY
[10] He that loveth silver shall not be satisfied with silver; nor he that loveth abundance with increase: this is also vanity. [11] When goods increase, they are increased that eat them: and what good is there to the owners thereof, saving the beholding of them with their eyes? [12] The sleep of a labouring man is sweet, whether he eat little or much: but the abundance of the rich will not suffer him to sleep. [13] There is a sore evil which I have seen under the sun, namely, riches kept for the owners thereof to their hurt. [14] But those riches perish by evil travail: and he begetteth a son, and there is nothing in his hand. [15] As he came forth of his mother’s womb, naked shall he return to go as he came, and shall take nothing of his labour, which he may carry away in his hand. [16] And this also is a sore evil, that in all points as he came, so shall he go: and what profit hath he that hath laboured for the wind? [17] All his days also he eateth in darkness, and he hath much sorrow and wrath with his sickness. Ecclesiastes 5:10-17
What the FED did is called “Insider Trading,” which is:
Insider trading is the buying or selling of a publicly traded company’s stock by someone who has non-public, material information about that stock.
Material nonpublic information is any information that could substantially impact an investor’s decision to buy or sell the security that has not been made available to the public.
This form of insider trading is illegal and comes with stern penalties including both potential fines and jail time.
Insider trading can be legal as long as it conforms to the rules set forth by the SEC.
According to Investopedia
Martha Stewart, as noted by Investopedia, is a prime figure for this, as she served jailtime for this in the early 2000’s.
But here we have corruption in broad daylight, but hardly anyone notices or cares. Was this headline news? Don’t kid yourself.
But it’s one big club and you ain’t in it. These people run the politicians. They dictate the politics of this country. Ultimately they are influenced by the Vatican (look into the wealth they have and dictate if you do not believe me); but these people are “untouchable” – not for much longer that is.
The FED Will Continue To Juice Up The Markets. Buying It All Up.
[7] Who goeth a warfare any time at his own charges? who planteth a vineyard, and eateth not of the fruit thereof? or who feedeth a flock, and eateth not of the milk of the flock? [8] Say I these things as a man? or saith not the law the same also? [9] For it is written in the law of Moses, Thou shalt not muzzle the mouth of the ox that treadeth out the corn. Doth God take care for oxen? [10] Or saith he it altogether for our sakes? For our sakes, no doubt, this is written: that he that ploweth should plow in hope; and that he that thresheth in hope should be partaker of his hope. (1 Corinthians 9:7-10).
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If they were to get punished, mostly likely it will be a slap on the wrist. I know GOD is going to judge them very soon.
good content. keep pressing forward.