Senator Elizabeth Warren attacked on Tuesday what she described as a “culture of corruption” at the Federal Reserve and urged the central bank to tighten its ethical protocols.
“I rise today to express my concern over a culture of corruption among senior officials [at] the Federal Reserve, ”Warren said from the US Senate floor. “Federal Reserve officials are responsible for making decisions that affect the global economy and affect the lives of every person in our country.”
Federal Reserve officials have demonstrated conflicts of interest by making questionable stock transactions, Warren said. She noted that recently retired Boston Fed boss Eric Rosengren has come under scrutiny following the release of annual disclosure forms showing he has bought and sold trust shares. real estate investment fund, or REIT, and other securities last year whose values were likely affected by the central bank’s efforts. supporting financial markets as the economy slipped into recession.
His REIT holdings have drawn particular attention as he has warned more than once that the coronavirus pandemic could hurt real estate values and lead to bank loan losses.
While Rosengren has said he abides by the ethical rules of the Federal Reserve, he chose to sell his shares to avoid “even the appearance of any conflict of interest.”
Warren said Tuesday that Fed officials need to clean up their act. “The Federal Reserve makes extremely big decisions, decisions involving interest rates, billions of dollars in loans and debts, and the regulation and supervision of banking and financial systems,” Warren said.
The past year has been “particularly substantial” as the Fed took action to support markets during the COVID-19 pandemic. Federal Reserve officials have relied on “large amounts” of non-public data to inform their decisions, she said.
“Under these circumstances, the fact that Fed officials are actively trading in the market raises legitimate questions about conflicts of interest and insider trading,” Warren said. “The actions of these Fed officials show, at the very least, very poor judgment. They also suggest that some Fed officials believe that building their own personal wealth is more important than building the confidence of the American people in the Fed. “
Warren said she asked the SEC to examine the stock transactions of Federal Reserve officials. She also reiterated her opposition to appointing Fed Chairman Jerome Powell for another term, saying he had “failed as a leader”.
“During his years as Fed chairman, it is not clear why Mr. Powell did not take action to prevent these activities,” Warren said. “Sure, he understands that this kind of behavior by Fed officials erodes public confidence in the Fed. And that, in turn, such corrosion undermines the effectiveness of the Fed. “
Warren lambasted Powell last week in a controversial Senate Banking Committee hearing, saying his record “is of great concern to me. Time and time again you have acted to make our banking system less secure. And that makes you a man. dangerous to run the Fed, and that is why I will oppose your re-appointment.
Powell had no response to Warren’s opposition during the hearing. At a previous press conference, he said he referred regulatory matters to the Federal Reserve’s vice chairman for oversight, Randal Quarles.