Senator Elizabeth Warren Presses Fed for More Information on Officials’ Trades
Senator Elizabeth Warren, the Massachusetts Democrat, pressed the central bank to provide more information by next Monday.
Senator Elizabeth Warren, Democrat of Massachusetts, asked the Federal Reserve in a letter sent Monday to release more information about a series of financial trades that several top officials made in 2020, when the Fed was actively propping up markets.
The Fed has become embroiled in a scandal over the transactions, which occurred in the months around its no-holds-barred market rescue at the outset of the pandemic, raising the possibility that policymakers could have financially benefited from the information they held and the decisions they were making. Jerome H. Powell, the Fed chair, has acknowledged that the trades were a problem and acted quickly to overhaul the central bank’s ethics rules.
But that has not stemmed the fallout. Mr. Powell, who was nominated for a second term as chair by President Biden, will almost surely face questions about the Fed’s ethics dilemma at his confirmation hearing on Tuesday before the Senate Banking Committee. Ms. Warren, who sits on that committee, is pushing for more details about Fed trading activity and new ethics rules, according to the new letter, which she sent to Mr. Powell. Ms. Warren, who previously requested that the Fed turn over information and documents surrounding the trades, is asking the Fed to “release all available information about the trades” by next Monday.
Ms. Warren said in her letter that the central bank had failed to fully respond to her previous requests for information.
Ms. Warren, who has criticized Mr. Powell’s tenure as chair, has said she will not support his renomination.
Scrutiny of the 2020 trades has intensified after The New York Times reported last week that Richard H. Clarida, the Fed’s vice chair, failed to initially disclose the full extent of his trading in his original financial disclosure. Mr. Clarida amended his disclosures in late December, and the document showed that he had moved out of a stock fund as the markets were plunging during the pandemic. Three days later, he moved back into the same fund, just before Mr. Powell announced that the central bank stood ready to rescue markets.
Ethics experts said the new information called into question the central bank’s original explanation that Mr. Clarida’s transaction was a preplanned rebalancing away from bonds and toward stocks, and said more information was needed to understand the trades.
The new information “raises suspicions that the Fed may be failing to disclose the full scope of the scandal to the public,” Ms. Warren wrote. “I therefore ask that you respond in full to my request by January 17, 2022.”
Mr. Clarida updated his disclosures after noticing “inadvertent errors,” a Fed representative said last week, and the Fed’s ethics officer said the newly noted trades were “in compliance with applicable laws and regulations governing conflicts of interest.” Still, they have drawn scrutiny because the rapid move out of and back into a stock fund at a time of market tumult looked less like a rebalancing toward stocks and more like a possible response to market conditions.
“This revelation is just the latest evidence of a deep-rooted ethics failure at the Fed and the urgent need for a comprehensive information release about officials’ trading activity,” Ms. Warren wrote.