Are Members of Congress Next? The Federal Reserve has prohibited policymakers from trading in stocks.
The Federal Reserve announced on Thursday that it plans to introduce new rules prohibiting its top policymakers and senior employees from trading individual stocks and other securities during “heightened financial market stress.”
Two of the Fed’s top officials—Robert S. Kaplan, president of the Federal Reserve Bank of Dallas, and Eric S. Rosengren, president of the Federal Reserve Bank of Boston—have traded substantially in the past year while the bank took major steps to support financial markets amid the pandemic.
The Fed’s move was “important,” according to David Wessel, a senior scholar in Economic Studies at the Brookings Institution who covered economics for The Wall Street Journal for 30 years. He explained that the central bank usually operates slowly, except in times of crisis, and that given the rapidity with which these rules were enacted, the bank considered the situation to be a crisis.
The Washington Newsday reported on Thursday that Congresswoman Lois Frankel, who sits on a subcommittee that oversees Department of Energy spending, traded fossil fuel equities in September amid the current global energy crisis. Members of Congress who traded in Pfizer and Johnson & Johnson stocks during the vaccine rollout were exposed by Open Secrets in April of last year.
These recent steps by the Fed, combined with mounting doubts about federal officials’ financial activities, raise the possibility that a comparable restriction may soon be enacted in Congress. Wessel doubts that such measures will be taken.
“On the subject of whether this (Fed move) will trigger something, I doubt it,” Wessel added. “Congress appears to have a difficult time reaching consensus on issues where some members have strong sentiments on both sides. There are a lot of members of Congress, and some of them have complicated family investments and come from the corporate sector.” Congressman Ro Khanna’s wife, according to The Washington Newsday, spends thousands of dollars in a range of stocks that he claims she had prior to their marriage. Khanna’s financial statements would have to be free of these transactions if his wife were to do so. This is a condensed version of the information.