The Federal Reserve (the Fed) or the central bank of the United States (U.S.) announced a ban on officials from owning stocks, individual bonds, and other activity restrictions. This attempt dampened the growing controversy over investment practices.
The ban applies to policymakers such as Federal Open Market Committee officials, including senior staff. In addition, there are future investments that should be limited to diversified assets, for example recoups.
Fed officials no longer own or buy certain company shares. Nor is investment permitted in individual bonds, holding agency securities, or derivative contracts. This new rule replaces an existing one beforehand.
The difference in old policies still allows county officials to buy and sell stocks. On new regulations can no longer be justified.
“This new policy is “hard” to improve public service. We serve and all senior officials maintain the main focus on the Federal Reserve mission,” said Fed Chairman Jerome Powell, reported from the CN pageBC, Friday (22/10/2021).
In the new regulation, for officials who wish to buy or sell securities (permissible companies) must make a 45 day advance notice. Whereas to become a securities holder at least securitiesamp up one's previous year's notice.
Based on written information, even officials should not buy or sell assets when financial market pressure rises.
“I hope that this quick action may be able to express my emotions and immediately return to focus on other work ahead,” said Atlanta Fed President Raphael Bostic.
The basis for the regulation is that there are several Fed officials who do stock selling at the same time when the central bank designs policies to improve market function. Moreover, stock selling and buying activities are carried out during kthe risis of the COVID-19 pandemic.
Since the beginning of the pandemic, the Fed bought bonds exceeding USD 4 trillion or IDR 56,610.4 trillion (estimated exchange rate of IDR 14,152 per US dollar). The move represents an attempt to increase the recording with liquidity and low interest rates.
The Federal Reserve also bought billions of U.S. dollar corporate bonds at several major companies on Wall Street. The goal is to ensure market function.
Regional presidents of Dallas Robert Kaplan (Regional Presidents of Dallas) and Eric Rosengren of Boston resigned shortly after being found guilty. In Kaplan's case, activities took place in 2020 and transactions ran agroundng in large numbers.
Vice Chairman of the Fed Richard Clarida is also featured in the report. Powell also sold securities last year. Although they are funds traded on the bourse that track the market index. The Fed chairman also has d bondsaerah, then bought the Fed as part of stimulus measures.
“Maybe this is a wise move, as it can distinguish between insider (the Fed official) transactions on general trade that look ‘to utilize' information' for its personal benefit,” director emeritus said. of the Center for Monetary and Financial Alternatives at the George Selgin Cato Institute.
The announcement confirmed the regional president should disclose the transaction within 30 days. In addition it meets existing requirements for FOMC senior members and staff.
The new rules will be entered officially for several months. Current ownership should be invested, although no schedule has been announced.
Complicated Projection of Old Rules
“The old Fed policy had a bad ‘look' so they (the Fed) needed this kind of rule. I don't think we need to feel sorry for them (the Fed officials). They'll do it with a cuckoo.p is good with this restraint,” he added
The new rule comes after a new revelation from the New York Times that the Fed's ethics office emailed officials in March 2020 to trade-related warnings due to pandemic worsening. Centra bank officialI launched a series of emergency measures.
Senator Elizabeth Warren, D-Mass who criticized the Fed said she would not support Powell if she was nominated for a second term.