Senator Reverend Warnock joined colleagues in leading legislation that would penalize Federal Reserve officials who do not follow new ethics guidelines announced by the central bank last week.
The Ban Conflicted Trading at the Fed Act would prohibit Federal Reserve officials from trading individual stocks, helping restore public trust in the Federal Reserve amid recent reports of possible conflicted trading
Senator Reverend Warnock: “This legislation will help increase transparency and strengthen confidence in the Federal Reserve System, and I look forward to getting it done”
ICYMI from the Wall Street Journal: “Fed Bankers Face Penalties for Ethical Breaches Under Senate Proposal”
Washington, D.C. — Yesterday, U.S. Senator Reverend Raphael Warnock (D-GA), joined by U.S. Senators Sherrod Brown (D-OH), Kirsten Gillibrand (D-NY) and Jeff Merkley (D-OR), introduced the Ban Conflicted Trading at the Fed Act, legislation to prohibit Federal Reserve officials from trading individual stocks and ensure Americans can trust that the Federal Reserve is acting in the best interest of all Americans.
“I’m proud to stand with Chairman Brown and our colleagues in introducing this important legislation that will help ensure America’s banking supervisors and regulators are acting with integrity,” said Senator Warnock. “This legislation will help increase transparency and strengthen confidence in the Federal Reserve System, and I look forward to getting it done.”
Senator Warnock’s introduction of this legislation follows his questioning of Federal Reserve Chair Jerome Powell during a recent Senate Banking committee hearing, shortly after learning of stock trades made by two Federal Reserve Bank Presidents. The bill would build on legislation Warnock, Brown, Merkley, and Gillibrand have introduced that would prohibit Members of Congress from abusing their public positions for personal financial gain by buying and selling individual stocks, or serving on public boards.
The Ban Conflicted Trading at the Fed Act would strengthen and clarify the ethics requirements at the highest levels of the Federal Reserve System (Fed). It would make sure that Fed officials never have a leg up on investing over hard-working Americans. The bill would also:
- Prohibit Federal Reserve Board Governors and Reserve Bank Presidents and Vice Presidents from trading individual stocks. Officials could invest in diversified mutual funds, investment trusts, and U.S. treasuries.
- Federal Reserve officials would have six months to divest individual holdings after enactment of the bill, or if received by gift or inheritance. They could also hold existing investments while in office, or transfer them to a blind trust.
- Federal Reserve officials would be subject to substantial fines if they fail to comply with the ban or other requirements.
- Reserve Bank Presidents, Vice Presidents, and Directors would be required to make the same public annual and periodic financial disclosures as Federal Reserve Governors, and would also be subject to the same penalties for violation of these requirements.
- The Board of Governors would administer the bill’s requirements, including with respect to the Reserve Banks. In addition, the bill would ensure that the Federal Reserve quickly implements the rules for Federal Reserve policymakers and senior staff, announced on October 21, 2021, to help guard against conflicts of interest. These include advance notice and prior approval of investment transactions and a one-year holding period.