shine trader live reports:
The recent sell-off of stocks and other assets by Fed officials has attracted official attention. Therefore, Fed chairman Powell ordered a comprehensive review of senior officials’ financial transactions.
The answer to the mystery of what assets American money printers bought and how much money they made was finally revealed.
(picture from Hailuo)
Are their asset purchases before the implementation of the Fed’s 2020 asset purchase plan?
Previously, Dallas Fed chairman Kaplan’s frequent huge transactions and rich investment returns were exposed, triggering external moral judgment on Fed officials. Subsequently, Fed chairman Powell said that he would review the ethical rules of Fed officials on appropriate financial activities. The results of the review were really surprising. Powell himself was “deeply involved” in holding the same type of assets purchased by the Federal Reserve.
According to the Fed, these holdings or transactions of Fed officials do not seem to violate the Fed’s code of conduct. However, it puts forward new requirements for the Federal Reserve’s conflict of interest policy and the supervision of central bank officials.
Data show that Powell, the Federal Reserve, holds $1.25 million to $2.5 million in municipal bonds in his family trust. It is said that he has no control over these bonds. But these are only a small part of the assets that Powell has reported. Although these bonds were purchased before 2019, they continued to be held when the Federal Reserve purchased $5 billion to $6 billion of municipal bonds last year, including municipal bonds purchased from Illinois by its family trust fund in 2016.
Boston Fed chairman Eric Rosengren’s real estate investment trust holds MBS worth $151000 and $800000. He made as many as 37 transactions in each of the four REITs, while the Federal Reserve purchased nearly $700 billion in MBS.
Thomas Barkin, chairman of the Virginia Federal Reserve, holds $1.35 million to $3 million in personal corporate bonds purchased before 2020. These include Pepsi Cola, home depot and Lilly bonds. Last year, the Federal Reserve opened a corporate bond purchase mechanism and purchased $46.5 billion of corporate bonds.
Even if the assets held by Fed officials were purchased earlier than 2020, whether they considered their own asset allocation when formulating corresponding policies is the most widely concerned issue in the society.
In view of the above facts, a new question arises: should the Fed prohibit officials from holding, buying and selling the same types of assets as the Fed significantly expanded its purchases in response to the new crown pandemic last year?
The Fed’s own code of conduct said that officials “should be careful to avoid any transaction or other behavior that may conflict their personal interests, system interests and public interests.”
A fed spokesman told the media that Powell ordered a review of the Fed’s ethical rules on “allowing senior Fed officials to hold financial assets and engage in financial activities” last week. However, Powell himself has no say in the purchase of individual municipal bonds by the central bank, nor in the trust investment of his family. A fed ethics official concluded that these assets did not violate government regulations.
Thomas Barkin, chairman of the Federal Reserve of Virginia, declined to comment, but he seemed to have no say in individual corporate bonds purchased by the Federal Reserve.
Eric Rosengren, chairman of the Boston fed, has announced that during his tenure as chairman of the state fed, he will sell his personal positions and stop trading. Dallas Fed chairman Robert Kaplan also said he would no longer trade and would sell his personal positions. Robert Kaplan actively trades millions of dollars in individual stocks. But he said his deal did not violate the Fed’s ethical rules.
Eric Rosengren’s spokesman said to ensure that his personal savings and investment transactions comply with the Fed’s ethical rules.
Dennis Kelleher, CEO of better markets, a non-profit organization, said that if the actions of these Fed officials did not violate the Fed’s rules, the Fed’s rules should change!
Dennis Kelleher said: “I think this kind of transaction is acceptable because the current Fed policy should allow this kind of transaction, which will only highlight the serious defects in the Fed’s policy.”
Although some transactions of Fed officials were not conducted during the so-called control period, Fed officials were not allowed to talk openly about monetary policy or trade at that time. But Dennis Kelleher believes that during a crisis like last year, “it should be regarded as a control period”, because Fed officials have been talking about and formulating policies to deal with rapidly developing emergencies.