Photo credit: thehill.com
Senators Scott and Warren Call for Ethical Reforms at the Federal Reserve
In a recent display of bipartisan concern, Senators Rick Scott (R-Fla.) and Elizabeth Warren (D-Mass.) sent a letter to Federal Reserve Chair Jerome Powell urging him to take decisive actions against “improper” trade violations occurring within the Fed. The senators criticized the current state of ethics at the central bank, describing it as a “culture of corruption” in need of significant reform.
The letter, sent on a Friday, pointed specifically to a 2024 report that highlighted inappropriate trading practices by Raphael Bostic, the president of the Federal Reserve Bank of Atlanta. Scott and Warren placed responsibility on Powell for not adequately addressing these concerns in a timely manner.
“You allowed this culture of corruption to flourish and were far too slow to implement necessary rules,” the senators stated in their correspondence. “When you finally did put rules into place, they were insufficient, and now it seems you are unwilling to enforce them.”
The allegations against Bostic are serious, as Scott and Warren claim that he breached federal regulations over 100 times and actively destroyed evidence of trades conducted from 2017 to 2022. They noted that the Fed’s inspector general had informed Powell of these violations, yet there has been no evident action taken against Bostic.
“Dr. Bostic’s situation is not isolated; it is part of a broader, enduring trading scandal involving Fed officials,” the letter continued. “The inspector general referred this matter to you and the Board five months ago, but there is no indication of accountability measures being enforced against Dr. Bostic for his illicit trades.”
The senators expressed that these failures have tarnished Powell’s record as chair and have undermined the integrity and operational effectiveness of the Federal Reserve.
In addition to advocating for stronger ethics policies, Scott and Warren called for the establishment of an independent inspector general (IG) at the Federal Reserve. They noted their frustration that the oversight authority concluded Bostic’s case without recommending any actions to hold him accountable.
“The inaction by the IG regarding Dr. Bostic underscores the urgent need for an independent IG,” the senators wrote, referencing legislation they have sponsored that would require the president to appoint IGs, who would then be subject to Senate confirmation.
This appeal for greater IG independence comes in light of recent events where former President Trump removed several IGs, raising alarm about the oversight capabilities in federal agencies.
Scott and Warren have consistently voiced criticism of Powell’s leadership at the Fed. Recently, Scott authored a Fox News op-ed in which he faulted Powell for erratic interest rates and unfavorable job market conditions.
In his commentary, Scott argued that under Powell’s stewardship, the Fed has failed to operate independently for the benefit of the American populace, suggesting that policy decisions have instead favored Washington insiders and financial elites.
Additionally, last December, Warren, alongside Rep. Maxine Waters (D-Calif.), confronted Powell regarding potential changes to the Fed’s stress testing procedures, expressing concerns about the implications for financial stability.
Powell has served as Federal Reserve Chair since his initial appointment by Trump and was subsequently reappointed by President Biden. Despite their disputes, Trump had stated he would allow Powell to complete his term as chair.
Source
thehill.com