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Powell sold $5 million worth of shares before Wall Street sank

The President of the US Federal Reserve (Fed), Jerome Powell, sold shares valued at 5$ million that he held on a personal level in October last year, before the sell-off on Wall Street. The sale was disclosed in documents that The American Prospect had access to.

Powell sold $5 million worth of shares before Wall Street sank

Powell sold $5 million worth of shares before Wall Street sank

Documents consulted by The American Prospect newspaper show that Powell sold between one and five million dollars worth of shares in the Vanguard Total Stock Market Index Fund on October 1, 2020.

In that month, the Dow Jones index would fall 6%, at worst monthly performance since the beginning of the pandemic. In addition to this deal, there were other sales without specific dates.

An official Fed source assured the Wall Street Journal that the financial transaction complies with central bank rules and was approved by the public ethics office.

As for the negotiations without dates, the same source clarified that they were carried out within the scope of the regulation that allows the aggregation of reinvestments.

The revelation of these sales comes after two of Powell’s colleagues — Robert Kaplan, president of the Dallas Fed, and Eric Rosengren, president of the Boston Fed — have resigned in a controversial case also related to buying and selling shares.

The two executives reportedly traded stocks and assets indexed to the real estate market last year while the central bank had large liquidity-stimulus programs in place to boost the economy.

Kaplan traded millions of dollars worth of shares in companies such as Apple, Amazon and Google, while Rosengren held stocks and real estate investment funds.

The revelation of these sales comes after two of Powell’s colleagues — Robert Kaplan, president of the Dallas Fed, and Eric Rosengren, president of the Boston Fed — have resigned in a controversial case also related to buying and selling shares.

The two executives reportedly traded stocks and assets indexed to the real estate market last year while the central bank had large liquidity-stimulus programs in place to boost the economy. Kaplan traded millions of dollars worth of shares in companies such as Apple, Amazon and Google, while Rosengren held stock and real estate investment funds.

In the wake of the scandal, Powell acknowledged that the current US central bank rules regarding what officials can and cannot trade and invest “are not adequate” and need to be updated.

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“We have to make changes and we are going to do so as a result of this,” Powell responded of the case to reporters after the September Fed meeting. “No one is happy about that,” he added.

Senator Elizabeth Warren also sent a letter to the 12 regional Fed presidents in which she called for a total ban on central bank leaders from holding shares.

“The controversy over asset trading by top Fed staff demonstrates why it is necessary to ban the holding and trading of individual stocks by senior officials who should serve the public interest,” she wrote.

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