Federal Reserve Bank headquarters in Washington, D.C., via website
Florida GOP Sen. Rick Scott and Massachusetts Democratic U.S. Sen. Elizabeth Warren are demanding answers from Federal Reserve Chairman Jerome Powell about his “ongoing refusal” to hold Federal Reserve officials accountable for possible ethics violations.
The lawmakers wrote a seven-page letter to Powell last Friday, with their concerns centered around findings published by the Federal Reserve’s Office of Inspector General last September regarding Raphael Bostic, president of the Federal Reserve Bank of Atlanta.
The report said that Bostic’s trading activity violated two Federal Open Market Committee (FOMC) rules and two Atlanta Fed code of conduct policies. It said that trades on his behalf took place during prohibited “blackout” periods around FOMC meetings 154 times between March 2018 and March 2023.
And the report alleges Bostic filed inaccurate disclosure forms, held more Treasury securities than allowed, and twice executed trades that diverged from those he’d sought central bank clearance for, as summarized by Reuters.
“Culture of Corruption”
“Dr. Bostic is just the latest in a series of Fed officials that have been involved in what is now a four-year old Fed trading scandal,” the senators wrote.
“The IG referred the matter to you and the other members of the Board five months ago, but there has been no public indication that you have held Dr. Bostic accountable for his illicit trades. 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 senators wrote that they have raised concerns with Powell before regarding “the culture of corruption that has arisen under your watch at the Federal Reserve.”
They continued: “The 2020 trading scandals raised public skepticism about the integrity of the Fed decision-making process and its highest-ranking official. 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. These failures represent a stain on your record as Fed Chair, and have damaged the integrity and effectiveness of the Federal Reserve.”
Questions
Scott and Warren concluded their missive with a list of seven questions, beginning with whether the Federal Reserve Board has updated its ethics and trading policies to address previous recommendations made by the Fed’s inspector general in May 2024. “If so, what specific policy changes were made and when were they approved?” they ask.
“We have received the letter and plan to respond,” a spokesperson for the Federal Reserve told the Phoenix.
Both senators have been extremely critical of Powell, whose term is scheduled to end in May 2026.
Warren, who has consistently pressed for stricter banking regulations, told NBC’s Meet the Press in 2023 that Powell “has failed” in his job and shouldn’t be chairman. Scott wrote in an op-ed on FoxNews.com recently that Powell’s “failed policies have devastated hardworking families and retirees with skyrocketing inflation.”
President Donald Trump has been pressuring the fed to cut interest rates and suggested he should have a say in its policies. Federal law insulates the organization from political pressure, but Trump has rolled past such restraints before, as when he fired at least one dozen federal inspectors general in late January without the required notice to Congress. Powell has said he will not resign if Trump asks him to. Powell’s term as chair ends in May 2026.
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