Atlanta Fed’s Bostic Acknowledges More Financial Disclosure Issues

Federal Reserve Bank of Atlanta President Raphael Bostic acknowledged Thursday more issues with his past financial disclosures, as part of a general release by the regional Fed banks of financial disclosure forms for their leaders covering 2022.

Bostic already acknowledged last year what he deemed as inadvertent errors in past disclosures tied to when some of his trades happened. He said in a footnote to his form covering 2022 there were more problems.

Noting his past acknowledgement that funds he and his spouse held, which were not managed by the couple, were traded during periods forbidden by Fed rules, Bostic said more trades happened when they should not have.

“The 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 wrote. The official said when preparing his disclosure form for last year, “it came to my attention” that entries in his disclosure for 2021 “needed to be clarified.”

Under the rules then, Fed officials, among a range of limitations, were prevented from trading securities and other investments around the time of Federal Open Market Committee meetings. Bostic’s issue is that those who managed his money did trade when they were not supposed to, causing him to amend his financial disclosure forms.

Bostic said the trades have been reported to both his bank and to the Board of Governors, as well as the Fed’s Inspector General, its in-house watchdog, which is currently investigating trading activity by regional Fed banks.

The investigation into Fed officials trading comes in the wake of disclosures that showed the then leader of the Dallas Fed, Robert Kaplan, had traded extensively in markets while helping set monetary policy. Former Boston Fed leader Eric Rosengren also reported trading that caused concern among observers, and both men left their positions in September 2021.

After their exit, the Fed tightened its ethics system to sharply restrict what officials and senior staff could invest in, and restricted when they could shift investments.

Fed Chairman Jerome Powell and then Fed Vice-Chair Richard Clarida also faced questions about their trading and were cleared last year by the central bank’s Inspector General. Powell’s issues echoed those of Bostic and also dealt with accidental trades landing during forbidden periods.

An ongoing investigation by the watchdog has yet to report on any potential wrongdoing by regional Fed leaders over trading. The Fed’s I.G. has faced repeated criticism over the speed of its investigation and whether it can pursue it independently.

The disclosures for the regional Fed banks follow the release in May of disclosures for central bankers serving on the Board of Governors in Washington. The disclosures for Fed senior leaders are released annually as officials are now operating under a much more stringent ethics code after a series of controversies over market trading by some former central bankers.

While some observers have applauded the Fed’s new trading restrictions, some remain critical of the effort on transparency. The restrictions extended beyond top Fed leadership and even include spouses, but even so, regional Fed banks are not providing public disclosure information on their respective senior staffs.

“Regional Fed banks have enormous power, and their actions impact the lives and livelihoods of all Americans,” said Dennis Kelleher, leader of Better Markets, a group that presses for more financial market regulation. “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,” he said.