© Reuters. The Federal Reserve headquarters in Washington on Sept. 16 2015. REUTERS/Kevin Lamarque/
(Reuters) – Two senior U.S. Federal Reserve staffers reported a series of financial market trades in early 2020 at a time when the central bank was putting in place emergency measures to prop up the economy at the onset of the COVID-19 pandemic, The Wall Street Journal reported https://on.wsj.com/33jP8rC on Friday.
John Stevens and Diana Hancock, both currently senior associate directors in the Fed’s research and statistics division, reported in official financial disclosure forms a series of trades in February and March 2020. The disclosure forms were reviewed by the newspaper.
The Fed did not immediately provide comment in response to a request from Reuters.
Stevens reported 46 financial trades on Feb. 27 and Feb. 28, 2020, buying and selling individual company stocks, mutual funds and other investments, almost all of which he told the Wall Street Journal were tied to a spouse’s inheritance. He did not direct the trading, he added.
Hancock’s disclosures included a sale of over $1 million in an exchange-traded fund, which holds shares in selected companies, on Feb. 27. She reported the purchase of between $500,001 and $1 million of shares in the same fund on March 18, 2020. Hancock told the newspaper her spouse made the trades, and she didn’t have any control over those transactions.
Fed Chair Jerome Powell, on Feb. 28, 2020, indicated the central bank would cut interest rates if needed, which it did in early March, the same month it launched a slew of programs to keep financial conditions loose and spur lending.
The Fed has come under sharp scrutiny since it was revealed last year that two regional Fed bank presidents, Dallas Fed President Robert Kaplan and Boston Fed President Eric Rosengren, were active traders during the pandemic. Both subsequently resigned from their posts.
In late December outgoing Fed Vice Chair, Richard Clarida, who has now left the Fed as planned, corrected his financial disclosures to show he sold a stock fund and then swiftly rebought it shortly before the Fed announced a barrage of rescue programs to stem the economic fallout from the pandemic.
Powell has since announced new ethics rules governing financial holdings and dealings at the central bank and an investigation by the central bank’s inspector general is underway.
However, questions remain about how much back and forth may have occurred over policymakers’ personal trading in a year when markets first cratered, then rebounded on the basis of both massive federal fiscal stimulus and an aggressive rescue effort by the Fed.
Earlier this week, the Fed, responding to a Freedom of Information Act request by Reuters, said there are about 60 pages of correspondence https://www.reuters.com/business/finance/fed-denies-release-correspondence-pandemic-trades-made-by-policymakers-2022-02-09 between its ethics officials and policymakers regarding financial transactions conducted during 2020 but “denied in full” to release the documents, citing exemptions under the information act that it said applied in this case.
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