Powell orders ethics review after top officials’ multimillion-dollar

Federal Reserve Chairman Jerome Powell has directed staff to review the central bank’s ethics rules around appropriate financial activities after filings showed a senior central bank official made multiple multimillion-dollar stock trades in 2020, while others held significant investments.

Documents released last week revealed that Dallas Fed President Robert Kaplan made multiple trades worth $1 million or more last year in individual stocks including Apple, Amazon and Delta Airlines.

Richmond Fed President Thomas Barkin, a former senior executive at consulting firm McKinsey & Co., disclosed several financial holdings in excess of $1 million.

His stakes included Coca-Cola stock worth more than $500,000 but less than $1 million. Barkin’s largest holdings, worth $1 million or more, included a variety of exchange-traded and mutual funds overseen by outside managers.

He had, for example, a holdings worth at least $1 million in Vanguard’s Energy Fund Admiral Shares, a mutual fund that invests in energy companies including ConocoPhillips, Marathon Petroleum Corp and BP.

Boston Fed President Eric Rosengren held stakes in four real estate investment trusts and several purchases and sales of similar property-owning vehicles, according to filings. He also held stock in Pfizer, Chevron and AT&T. His investments were in the tens to hundreds of thousands of dollars.

Even the appearance of self-dealing at the Fed could prove problematic to an institution tasked with the impartial oversight of U.S. employment and inflation.

“Because the trust of the American people is essential for the Federal Reserve to effectively carry out our important mission, Chair Powell late last week directed Board staff to take a fresh and comprehensive look at the ethics rules around permissible financial holdings and activities by senior Fed officials,” a Fed spokesperson told CNBC.

“This review will assist in identifying ways to further tighten those rules and standards,” they added. “The Board will make changes, as appropriate, and any changes will be added to the Reserve Bank Code of Conduct.”

The trades quickly came under scrutiny given the Fed’s critical role in managing the U.S. economy as well as its influence over interest rates and liquidity markets. The Covid-19 pandemic and ensuing recession magnified the Fed’s power in 2020. Congress allows the Fed, with the Treasury Department’s approval, to embark on a wide range of emergency lending measures to flush the economy with cash during times of emergency.

Rosengren and Kaplan serve as presidents of two of the Fed’s 12 regional banks that span the country. The regional bank presidents take turns serving on the Federal Open Market…