The US Federal Reserve has banned top officials from buying individual stocks and bonds, as well as limit active trading, after an embarrassing scandal that led two officials to resign and clouded Fed Chairman Jerome Powell’s path to renomination.
“These tough new rules raise the bar high in order to assure the public we serve that all of our senior officials maintain a single-minded focus on the public mission of the Federal Reserve,” Powell said in a statement on Thursday.
The Fed’s action marks its most significant response yet to recent revelations over trading last year by a few top policymakers as the central bank fought to protect the US economy from the COVID-19 pandemic.
Photo: Reuters
While Powell’s critics seized on the disclosures as ammunition to block his potential renomination by US President Joe Biden and demanded an investigation, Powell chair had said little beyond assuring Americans the rules would be thoroughly reviewed.
US Senator Elizabeth Warren, among his most vocal opponents, has asked the Securities Exchange Commission to look into whether any insider trading rules were breached.
Critics also seized on Powell’s own financial disclosure last year — which showed that he sold between US$1 million and US$5 million in a broad-based stock index fund in October last year —to question keeping him at the helm of the central bank.
Powell’s term ends in February. Fed watchers said that if the ethics scandal was hurting Powell’s chances for another four years, his prompt action to tighten the rules could tip the balance back in his favor.
“I don’t think there is anything that will satisfy Powell’s small, but vocal group of critics — they will continue to use any argument they can find,” said Roberto Perli, a former Fed economist and partner at Cornerstone Macro LLC. “But regardless, Powell showed leadership and the ability to do the right thing quickly. So, if anything, I think this strengthens his candidacy. The Fed needs an independent chair.”
Under the new policies, senior Fed officials — including regional bank presidents, Washington governors and senior staff — are limited to purchasing diversified investment vehicles, such as mutual funds, the central bank said in a statement on Thursday.
New appointees will have to divest certain assets before joining, such as a portfolio of individual corporate, a Fed official said on a briefing call with reporters.
Other rules “to help guard against even the appearance of any conflict of interest in the timing of investment decisions” include providing 45 days’ advance notice for buying and selling securities, obtaining prior approval for such transactions and holding investments for at least one year. Additionally, “no purchases or sales will be allowed during periods of heightened financial market stress,” the Fed said.
“Today’s announcement is a start, but we can’t let up now,” US Senator Sherrod Brown, who chairs the Senate Banking Committee which oversees the Fed, said in a statement. “The American people need to be able to trust that the Federal Reserve works for them — that’s why strong reforms are needed now more than ever.”
The 12 regional Fed presidents are required to publicly disclose financial transactions within 30 days, a policy that already applies to Washington-based governors and senior staff, the Fed said. They were previously only required to do so on an annual basis.
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