Federal Reserve Chair Jerome Powell has deflected requests from a top critic, Sen. Elizabeth Warren, for details of financial transactions by central bank officials, risking an escalation of tensions with lawmakers over disclosure issues.
Warren, a Massachusetts Democrat, sent letters to Powell and all 12 of the Fed's regional branches in early August, requesting "all stock, bond, and other investment trades by senior officials" from January 2020 through August. Warren also wanted to see internal communications by Fed ethics officers warning officials away from trading in a period of Fed market intervention.
Powell, in a Sept. 16 letter to Warren obtained by Bloomberg News, wrote that the banks "have fully cooperated with the board to implement the new rules, which place the Federal Reserve's investment and trading policies at the forefront of major US federal agencies and global central banks." He said his letter came on behalf of the Fed system.
Powell's letter referred Warren to disclosures already available on the web and new ethics rules being implemented by the Fed following an ethics scandal in 2021. He noted that Fed staff provided a briefing to legislative aides on the Senate Banking Committee, including members of Warren's staff.
The Fed overhauled those rules last year after revelations about unusual trading activity by several senior officials during 2020, when the central bank was taking aggressive action to protect the economy from COVID-19. It slashed interest rates to nearly zero and unleashed emergency lending programs supporting multiple markets to protect the U.S. as the pandemic spread.
Early retirement
Then-Dallas Fed President Robert Kaplan and his Boston colleague Eric Rosengren both announced their early retirement following the revelations, with Rosengren citing ill health. Fed Vice Chair Richard Clarida also came under scrutiny for his transaction on the eve of a Fed statement signaling it was getting ready to calm market panic.
Regional Fed presidents file annual financial disclosures, and it is now routine for those banks to make them publicly accessible.
The Fed's inspector general, an internal watchdog, looked into transactions by Powell's family trust and by Clarida, and
The senator criticized Powell's latest response to her requests.
'Deeply concerned'
"This is the largest ethics scandal in Federal Reserve history, and I'm deeply concerned that Chair Powell risks undermining confidence in the Fed if this matter is not taken more seriously," Warren said in a statement this week.
"The inspector general's inadequate investigation is no substitute for congressional oversight. The Fed needs to turn over the requested information to Congress."
The senator's spokesman said she hasn't received a response from a single reserve bank, nor has the Fed Board answered her request for copies of advisories from the Fed Board ethics office in March 2020.
Members of the Senate Banking Committee, which oversees the Fed, are becoming increasingly dissatisfied by what they see as Fed stonewalling on oversight requests.
Sen. Pat Toomey, a Republican from Pennsylvania, has requested information on a master account application by Reserve Trust, a financial technology firm that once included a former Fed governor on its board. Toomey's staff has received no response.
"The Kansas City Fed has refused to turn over a single document regarding Reserve Trust's master account application," said Amanda Thompson, a spokeswoman for Toomey.
