In wake of a stock trading scandal at the Federal Reserve, Sen. Elizabeth Warren (D-Massachusetts) has called for an investigation into the agency’s officials to probe whether or not they were involved in insider trading.
Warren called on the Securities and Exchange Commission (SEC) to look into reports that the Fed’s Vice Chair Richard Clarida moved between $1 million and $5 million in stocks on February 27, 2020, the day before Fed Chair Jerome Powell made a statement about potential policy change in response to the pandemic. Though the Fed is launching an internal review of Clarida’s actions, Warren said that the SEC should also be involved.
“The reports of this financial activity by Fed officials raise serious questions about possible conflicts of interest and reveal a disregard for the public trust,” Warren said in a scathing letter to the head of the SEC. “They also reflect atrocious judgement by these officials, and an attitude that personal profiteering is more important than the American people’s confidence in the Fed.”
She went on to say that the SEC, which regulates the stock market and securities industry, should have a special interest in the trade. “Most importantly from the perspective of the SEC, if these trades were based on Fed officials’ knowledge of non-public, market moving information, they may have represented potentially illegal activity,” Warren wrote.
The lawmaker asked SEC Chair Gary Gensler to investigate stock trading by all top Fed officials — not just Clarida — in order to discern whether insider trading took place.
“It is not clear why Chair Powell did not stop these activities, which corrode the trust and effectiveness of the Fed,” she wrote.
The past few months, Warren has advocated for a ban on officials trading stocks, a move she believes will combat corruption. Last month, she called on local Fed leaders to ban their staff from trading stocks — and earlier this year, she unveiled legislation that would ban federal officials and lawmakers, including members of Congress, from trading stocks altogether.
“It is a no-brainer,” she said at the time, adding that barring stock trades would help increase public confidence in federal institutions.
To Warren, the scandal is further evidence of the need for major changes in leadership at the Fed. On Tuesday, the Massachusetts lawmaker delivered a speech on the Senate floor criticizing the “culture of corruption” among Fed officials.
“The responsibility to safeguard the integrity of the Federal Reserve rests squarely with [Powell],” Warren said. “Setting the right culture at the Fed and making sure safeguards are in place to prevent self-dealing and to protect the public’s confidence should be the minimum standard any Federal Reserve chair should meet. And once there is a problem, a quick and aggressive response is critical. Chair Powell has failed at both tasks.”
Though Powell is up for potential renomination by the Biden administration, Warren is one of his staunchest opponents in Congress and has been campaigning against his renomination. On Tuesday, she described him as a “go along to get along leader who doesn’t know or doesn’t care when, on his watch, people with great responsibility advance their own interests over the interests of our nation,” adding that he has amassed “failures” as a leader.
Warren and progressives like Rep. Alexandria Ocasio-Cortez (D-New York) have pointed out Powell’s previous regulation failures in the past. The Trump-era appointee has been weak on climate and has watered down post-recession bank regulation policies, they said, which poses risks to the financial stability of the country’s working class.
Truthout Is Preparing to Meet Trump’s Agenda With Resistance at Every Turn
Dear Truthout Community,
If you feel rage, despondency, confusion and deep fear today, you are not alone. We’re feeling it too. We are heartsick. Facing down Trump’s fascist agenda, we are desperately worried about the most vulnerable people among us, including our loved ones and everyone in the Truthout community, and our minds are racing a million miles a minute to try to map out all that needs to be done.
We must give ourselves space to grieve and feel our fear, feel our rage, and keep in the forefront of our mind the stark truth that millions of real human lives are on the line. And simultaneously, we’ve got to get to work, take stock of our resources, and prepare to throw ourselves full force into the movement.
Journalism is a linchpin of that movement. Even as we are reeling, we’re summoning up all the energy we can to face down what’s coming, because we know that one of the sharpest weapons against fascism is publishing the truth.
There are many terrifying planks to the Trump agenda, and we plan to devote ourselves to reporting thoroughly on each one and, crucially, covering the movements resisting them. We also recognize that Trump is a dire threat to journalism itself, and that we must take this seriously from the outset.
Last week, the four of us sat down to have some hard but necessary conversations about Truthout under a Trump presidency. How would we defend our publication from an avalanche of far right lawsuits that seek to bankrupt us? How would we keep our reporters safe if they need to cover outbreaks of political violence, or if they are targeted by authorities? How will we urgently produce the practical analysis, tools and movement coverage that you need right now — breaking through our normal routines to meet a terrifying moment in ways that best serve you?
It will be a tough, scary four years to produce social justice-driven journalism. We need to deliver news, strategy, liberatory ideas, tools and movement-sparking solutions with a force that we never have had to before. And at the same time, we desperately need to protect our ability to do so.
We know this is such a painful moment and donations may understandably be the last thing on your mind. But we must ask for your support, which is needed in a new and urgent way.
We promise we will kick into an even higher gear to give you truthful news that cuts against the disinformation and vitriol and hate and violence. We promise to publish analyses that will serve the needs of the movements we all rely on to survive the next four years, and even build for the future. We promise to be responsive, to recognize you as members of our community with a vital stake and voice in this work.
Please dig deep if you can, but a donation of any amount will be a truly meaningful and tangible action in this cataclysmic historical moment. We are presently looking for 350 new monthly donors in the next 6 days.
We’re with you. Let’s do all we can to move forward together.
With love, rage, and solidarity,
Maya, Negin, Saima, and Ziggy