June 16th 2023.
Raphael Bostic, President of the Federal Reserve Bank of Atlanta, acknowledged Thursday the presence of further issues with his past financial disclosures. This was part of a general release of financial disclosure forms of regional Federal Reserve bank leaders covering 2022. Last year, Bostic already acknowledged what he deemed as "inadvertent errors" in his past disclosures related to the date of some of his trades. He mentioned in a footnote to his form for 2022 that there were more issues.
In his statement, Bostic noted that there were trades that happened when they should not have. He stated that "transactions that occurred on May 2, 2022, were associated with funds invested through one such account and occurred prior to realizing that they were subject to blackout restrictions." Bostic revealed that when he was preparing his disclosure form for 2021, it came to his attention that some entries in the form needed to be clarified.
The Federal Reserve regulations at the time prohibited their officials from trading securities and other investments around the time of the Federal Open Market Committee meetings. Bostic's issue was that those who managed his money did trade during the forbidden period, leading him to amend his financial disclosure forms. He has already reported these trades to the Federal Reserve Board, his bank, and the Fed's Inspector General, which is currently conducting an investigation into trading activity by regional Fed banks.
The trading activity at the Fed has come under scrutiny due to the disclosures of the former leader of the Dallas Fed, Robert Kaplan, and the former Boston Fed leader Eric Rosengren. After their departure, the Fed tightened its ethics system to limit investments of officials and senior staff, and to restrict when they can make investment shifts.
Questions were raised about the trading activity of Jerome Powell, Chairman of the Fed, and Richard Clarida, the former Vice-Chair. However, they were cleared last year by the Central Bank's Inspector General. The investigation is still ongoing and has yet to report any potential wrongdoing by regional Fed bank leaders.
The release of disclosures for the regional Federal Reserve banks followed the release of disclosures for the Board of Governors in Washington in May. Although the new trading restrictions have been praised by many, others are critical of the transparency effort. The restrictions do not just apply to the top Fed leadership, but also to their spouses. Despite this, regional Federal Reserve banks are not providing public disclosure information on their senior staff.
Dennis Kelleher, leader of Better Markets, a group that calls for more financial market regulation, said, "Regional Fed banks have enormous power, and their actions impact the lives and livelihoods of all Americans. Their unwillingness to provide even the most basic transparency is an insult to the American people. They either need to start disclosing much more information or Congress is going to force them to."
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