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Senator Warren asks SEC to probe trading by Fed policymakers By Reuters

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© Reuters. Sen. Elizabeth Warren (D.MA) interviews Janet Yellen, Treasury Secretary, and Powell, Federal Reserve Chairman, during a Senate Banking, Housing and Urban Affairs Committee hearing about the CARES Act, in the Hart Senate Office Building, Washington, DC, U.S., S

(Reuters) – Senator Elizabeth Warren called for the U.S. Securities and Exchange Commission Monday to examine trading transactions by U.S. top central bankers including two Fed presidents, who resigned following public outcry.

Warren wrote a letter addressed to Gary Gensler the SEC Chair. Warren also mentioned trading done by Richard Clarida, Fed Vice Chair, in February 2020. This was shortly after Fed Chair Jerome Powell warned about coronavirus risks and promised a Fed response.

Warren said in the open letter that Warren had written, “The reports about this financial activity of Fed officials raise serious doubts about potential conflicts of interest” and showed a disdain for the trust of the public. “If these trades were based on Fed officials’ knowledge of non-public, market moving information, they may have represented potentially illegal activity.”

The spokesperson from the SEC refused to comment.

After revelations by Eric Rosengren, Boston Fed President, and Robert Kaplan of Dallas Fed President had traded real estate securities last year and the Fed’s rescue plan for the U.S. financial and economic markets through massive Treasuries purchases and the purchase of housing-backed bonds, the Fed began its own ethics and trading rule review.

Both stated that they followed Fed trading rules.

Rosengren quit last week after a diagnosis of kidney disease. Kaplan will be leaving Friday.

Bloomberg reported Clarida’s trade late Friday night. It involved buying $1 million to $5 million in a bond index, and selling the same amount on Feb. 27. This was a day before Powell made a statement warning of the “evolving” threats to America’s economy due the pandemic. After the statement, the stock index’s value dropped dramatically.

Bloomberg was informed by Bloomberg that Clarida transactions had been “pre-planned” and were the result of a rebalancing process. The Board also approved the choice of funds.

Warren called Powell “dangerous” last week and stated that she will oppose Powell’s reappointment due to what she considers a weakening in bank supervision under Powell’s tenure.

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