U.S. Sens. Elizabeth Warren (D-MA) and Rick Scott (R-FL) expressed their concerns to Federal Reserve Board Chair Jerome Powell over what they see as a lack of accountability for Federal Reserve officials.
Specifically, Warren and Scott are pointing to the lack of accountability for officials involved in improper trading and other violations of Fed ethics rules.
The cite a report from the Federal Reserve Inspector General that identified hundreds of improper trades by Raphael Bostic, president of the Federal Reserve Bank of Atlanta. That report was released in September and the senators pointed out that Powell has not yet held Bostic accountable for these violations. In a letter to Powell, the senators are calling 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 report on Bostic is just the latest in a series of ethics issues involving Fed officials that violated the Fed’s rules. Warren and Scott said these infractions raise serious questions about the integrity of the Federal Reserve and contribute to a troubling culture of corruption. While they noted that the Fed board did pass some ethics rule to address these issues, the senators called them weak and unenforceable.
“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 are seeking answers from a list of questions sent to Powell. They also reiterated their call for a stronger ethics policy.