US Federal Reserve Chair Jerome Powell’s review of internal rules around investments by policymakers is a move in the right direction, but will not stem pressure for more accountability at the US central bank.
“It’s about time,” Roberto Perli, a partner at Cornerstone Macro LLC, said of a Fed statement on Thursday that Powell had ordered a “fresh and comprehensive” study of the ethics rules around permissible financial holdings and activities by senior Fed officials.
“The impression that it gives about the institution is just poor. So yes, it should be changed,” he said.
Photo: Reuters
Powell’s move followed revelations last week over investments and trading by two of the central bank’s regional bank presidents. Their actions were criticized for potential conflict of interest at a time when the Fed is under fire for emergency COVID-19 pandemic policies that critics say have elevated stock prices and benefited the wealthy.
Boston Fed President Eric Rosengren and Dallas’ Robert Kaplan on Thursday last week said that they would sell their individual stock holdings by Sept. 30.
Both said that their transactions complied with Fed ethics rules and that they were acting to avoid even the appearance of a conflict of interest.
Critics said the situation should never have arisen in the first place.
“I fear that the Kaplan and Rosengren trades have undermined the Fed’s policy legitimacy, something vital to its ability to succeed at its legislative mandates,” said Peter Conti-Brown, a University of Pennsylvania Wharton School professor of legal studies. “An ethics review is a good start. It cannot be the end.”
The considerable wealth of some US policymakers highlighted in their financial disclosures was also seen as an issue by Benjamin Dulchin, director of the Fed Up campaign at the Center for Popular Democracy.
“The bigger problem is how asset-wealthy the majority of the Fed’s leaders are, and how that creates a natural assumption for them that what’s good for Wall Street is good for the country,” he said. “The Fed can’t prohibit wealthy people from serving in Fed leadership, but the Fed absolutely can implement policies to make their leadership more diverse.”
Greater diversity among top central bankers is a key demand of progressives as US President Joe Biden weighs whether to give Powell — wealthy and white — another four years when his term as Fed chair expires in February.
Critics also focused on the complex nature of the central bank’s structure.
US Senator Elizabeth Warren said in a statement on Thursday that she had written to all 12 regional Fed bosses to urge them to adopt a self-imposed ban on the ownership and trading in individual stocks by senior Fed officials and that they act “within 60 days.”
The role of the regional Fed directors was also under scrutiny. Periodic efforts to revamp the Fed system have a long history in Washington, but rarely get far.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to