Elizabeth Warren blasts the 'egregious and embarrassing ethics breaches' among top Fed officials who she says have engaged in 'improper' stock trading for over a year

• Sen. Elizabeth Warren slammed "improper stock trading" among Fed officials.
• Recent reports have found officials have traded stocks privately, which has raised ethics concerns.

A Democratic lawmaker is keeping pressure on officials at the nation's central bank to come clean about their financial decisions.

On Monday, Massachusetts Sen. Elizabeth Warren sent a letter to Federal Reserve Chair Jerome Powell regarding what she called "egregious and embarrassing ethics breaches by top officials at the Federal Reserve System," referring to reports of "improper" stock trading by officials behind closed doors.

For example, an October report found that Federal Reserve Bank of Atlanta President Raphael Bostic failed to disclose transactions ahead of Fed meetings during the pandemic, when the Fed was heavily involved in markets, and St. Louis Federal Reserve Bank President James Bullard was found the same month to have had an off-the-record meeting with Wall Street investors.

"It is highly disturbing – and emblematic of your failure to instill a culture of ethics at the Fed – that two new examples of Fed officials' scandalous behavior could unfold even while the Fed had still been unable to provide an explanation for previous bad behavior," Warren wrote.

The scandals predate the October findings — in September 2021, for example, Dallas Fed President Robert Kaplan was found to have made multiple stock trades in 2020, along with Boston Fed President Eric Rosengren.

"The revelations underscore my long-held concerns that Fed officials could be seen as profiting from their positions by leveraging sensitive information, and that they are overly cozy with the Wall Street banks they oversee," she added. "These conflicts of interest erode the Fed's integrity and make a mockery of its vaunted independence."

Since September 2021, as Warren said, reports have surfaced of Fed officials engaging in stock trades while setting pandemic policies, but Powell has not yet publicly released any information on the potential ethics breaches by those officials. Warren requested he provide information on how the central bank will handle ethics violations by November 21.

Last week, the Fed hiked interest rates 0.75 percentage points — the fourth consecutive time doing so at that scale to fight inflation — and during the press conference following the announcement, Powell addressed Warren's ethics concerns by saying "the public's trust is really the Fed's and any central bank's most important asset and any time one of us, one of the policy makers violates or falls short of those rules, we do risk undermining that trust and we take that very seriously."

"Any trade anyone has to make is covered, has to be approved, pre-approved and there's a lag, it has to be pre-approved 45 days before it happens," Powell added, referring to a program in place to approve officials' trades. "So there's no ability to gain market, so it's a really good system, it worked here. And we, I think we all said to each other... we re-committed to each other and to this institution to hold ourselves to the highest standards and avoid these problems."

He declined to comment on any pending investigations of Fed officials.

Along with looking into potential ethics breaches within the Fed, Warren and other Democratic lawmakers have also raised concerns with the tactics the Fed is using to fight inflation. While Powell said aggressive interest rate hikes are necessary to slow the economy and get high prices under control, some Democrats have said continuing to raise rates could lead the economy into a recession and cause job losses.

Still, as Insider previously reported, October's jobs report continued to reflect a strong labor market.