Bonds

Powell sells muni holdings as new Fed ethics rules take effect

Federal Reserve Chair Jerome Powell recently sold more than $1 million of municipal bonds issued by various entities across the U.S. as tough new ethics rules took effect for central bank officials in the wake of a trading scandal last year.

The 22 separate transactions on June 30, with a total value ranging from about $1.2 million to $2.5 million, were detailed in a disclosure dated July 1 and published Thursday by the U.S. Office of Government Ethics.

Jerome Powell, chairman of the US Federal Reserve, arrives to a Senate Banking, Housing, and Urban Affairs Committee hearing in Washington, D.C., U.S., on Wednesday, June 22, 2022. Powell said the central bank will keep raising interest rates to tame inflation following the steepest hike in almost three decades.

Ting Shen/Bloomberg

Powell’s sales came at the early end of the 12 months that Fed officials have to dispose of prohibited holdings under the new rules, which were adopted in February and went into effect on May 1.

Read More: Fed Watchdog Clears Powell, Clarida in Trading Scandal Probe

Powell introduced the measures to avoid a repeat of the ethics scandal that engulfed the Fed in 2021. Revelations emerged on the unusual trading activities of some senior officials the year before as the central bank took emergency action to shield the U.S. economy from the spread of COVID-19.

A Fed spokesperson said the central bank didn’t immediately have a comment. Powell had previously committed to making the divestments within 90 days of his confirmation for a second term as chair by the Senate, which happened on May 12.

The Fed’s inspector general, Mark Bialek, announced last week that he had cleared Powell and former Vice Chair Richard Clarida’s trading activity, saying they had not broken any rules, but a probe into the former heads of the Dallas and Boston regional Fed banks remained open.

Then-Boston Fed President Eric Rosengren and his Dallas counterpart, Robert Kaplan, stepped down last year after questions were raised about their trading activity during 2020. Rosengren cited ill health in announcing his early retirement.

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