Elizabeth Warren, Rick Scott Warn of “Culture of Corruption” at the Fed, Call for Stronger Ethics Enforcement
“We write regarding what appears to be your ongoing refusal to hold Federal Reserve (Fed) officials accountable for violations of the Fed’s Investment and Trading Policy and the Financial Disclosure Rules.”
Washington, D.C. – U.S. Senators Elizabeth Warren (D-Mass.), Ranking Member of the Senate Banking, Housing and Urban Affairs Committee, and Senator Rick Scott (R-Fla.), sent a letter to Federal Reserve (Fed) Chair Jerome Powell, expressing deep concerns regarding the lack of accountability for Federal Reserve officials involved in improper trading and other violations of Fed ethics rules.
A September report by the Federal Reserve Inspector General (Fed IG) identified hundreds of improper trades by Dr. Raphael Bostic, President of the Federal Reserve Bank of Atlanta. Yet Chair Powell has not held Dr. Bostic accountable for these violations. In the letter, the senators reiterated their call for the Fed to adopt a stronger ethics enforcement policy.
“[T]here has been no public indication that you have held Dr. Bostic accountable for his illicit trades,” the senators wrote. “Given our concerns about the culture of corruption that has arisen at the Fed while you have been Chair, we again urge you to adopt a stronger ethics policy and take all appropriate measures to hold Fed officials accountable for violations of key Fed ethics rules and the public trust.”
The IG’s Bostic report is just the latest revelation in a series of ethics scandals in which Fed officials–including Chair Powell– engaged in trades that violated the Fed’s rules and betrayed the public’s trust. These infractions, the senators highlighted, raise serious questions about the integrity of the Federal Reserve and contribute to a troubling culture of corruption that has emerged under Powell's leadership. Indeed, in the aftermath of this scandal and in response to the IG’s recommendations that the Board reform its ethics approach, the Board passed a weak and unenforceable policy one year later - and Chair Powell has ignored the senators’ calls to repeal this policy and replace it with a stronger one.
“You allowed this culture of corruption to flourish, and were far too slow to put rules in place to address it. When you did establish these rules, they were inadequate. And now it appears that you are refusing to enforce them,” the senators wrote. “These failures represent a stain on your record as Fed Chair, and have damaged the integrity and effectiveness of the Federal Reserve.”
The senators provided Chairman Powell with a list of questions to respond to and reiterated their call for a stronger ethics policy to restore public trust in the Federal Reserve.
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