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Saying a report by the U.S. Federal Reserve’s inspector general (IG) was “troubling,” Senator Elizabeth Warren (D-MA) castigated Fed chair Jerome Powell in a letter for withholding information about trades by Fed officials.
The IG’s investigation was sparked by revelations that Robert Kaplan, president of the Federal Reserve Bank of Dallas, and Eric Rosengren, president of the Federal Reserve Bank of Boston, were making private securities trades while the central bank was shoring up financial markets with bond purchases, rock-bottom interest rates, and other aids.
The trades were not reported, violated no laws, and complied with federal regulations, The New York Times said, but the transactions raised questions about the officials’ judgment and the Fed’s ethical standards, which seem to allow the possibility or appearance that senior Fed officers could profit from inside information.
Warren accused Powell and the Fed of not being fully forthcoming with the IG’s office.
The IG’s report “raises new concerns about the reasons why you continue to withhold key information about Fed officials’ financial trading activity from Congress and the public,” Warren wrote in her 11 August letter.
Warren sits on the Senate’s banking committee, which oversees the Fed.
Warren also sent letters to all 12 federal reserve banks, asking that records of all financial transactions by senior Fed officials since 1 January, 2020 be sent to the committee by 25 August.
“My ongoing concerns about the culture of corruption at the Fed have become more extensive with each new revelation and with each additional failure by the Fed to provide the information needed by Congress and the public,” she wrote.
Congress’s frustration with the Fed is growing.
After the Fed refused the banking committee’s requests for documents in another matter, Republicans on the committee threatened to introduce legislation that would compel the Fed to comply with such requests.
“Obstructionism has become a too-common response from the Fed and regional Fed banks—which, after all, are creatures of Congress—to oversight inquiries from members of both parties,” 11 Republican committee members wrote in a 9 August letter to Powell.
Federal reserve banks are exempt from complying with requests made under the Freedom of Information Act.
After the flap over Kaplan’s and Rosengren’s trades, the Fed’s board asked the bank’s IG to investigate their trades and also those of Fed vice chair Richard Clarida. The IG also looked into financial dealings by a Powell family trust.
The IG found no evidence that Clarida or Powell “violated laws, rules, regulations, or policies related to trading activities” by Fed officials, it said in an 11 July memorandum to Warren.
Senator Warren was not happy.
She found that “gaps in the review and the IG’s credulous acceptance of explanations for clearly improper behavior render the findings of the IG’s report simply not credible,” she wrote in her letter to Powell.
TREND FORECAST: As we have long noted, the Bankster Bandits are leaders of the crime syndicate. Their former Fed Head, Janet Yellen is the U.S. Treasury Secretary. And we greatly detailed the revelations in “Bankster Bandits Get Richer Playing the Inside Track” (14 Sep 2021).
Kaplan and Rosengren resigned shortly after the trades were publicized, which we noted in “Criminality in High Finance: The Beat Goes On” (9 Nov 2021).