[Congressional Record Volume 167, Number 175 (Tuesday, October 5, 2021)]
[Senate]
[Pages S6899-S6900]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]



                Anti-Corruption and Public Integrity Act

  Ms. WARREN. Mr. President, I rise today to express concern about a 
culture of corruption among top officials at the Federal Reserve.
  Officials at the Federal Reserve are entrusted to make decisions that 
affect the global economy and touch the lives of every person in our 
country. These officials have access to private information, often 
gathered at the expense and even by legislative mandate. There is no 
room for self-dealing by Federal officials. There is no room for even 
the appearance of self-dealing. Every member of the Federal Reserve 
should know that without a reminder from Congress. But, evidently, 
there is a problem at the Fed. We don't know the scope of the problem 
or how long it has been going on, but a very disturbing picture is 
emerging.
  Last month, it was discovered that, during the economic turmoil of 
2020, as the Fed was called on to take extraordinary measures to 
support our economy, Robert Kaplan, President of the Federal Reserve 
Bank of Dallas, made multiple million-dollar-plus stock trades.
  It was also disclosed that, in the same period, Eric Rosengren, 
President of the Federal Reserve Bank of Boston, made multiple 
purchases and sales related to his stakes in real estate investment 
trusts and other securities.
  A new report last week revealed that a third key Fed official, Vice 
Chair Richard Clarida, also traded between $1 million and $5 million 
out of a bond fund into stock funds exactly 1 day before Fed Chair 
Powell publicly suggested possible policy actions that would 
significantly affect bonds and stocks.
  The Federal Reserve makes hugely consequential decisions--decisions 
involving interest rates, trillions of dollars' worth of lending and 
debt, and the regulation and supervision of the banking and financial 
systems. The year 2020 was particularly consequential, with the Fed 
taking unprecedented steps to backstop financial markets in response to 
the pandemic. To make these specific decisions, Fed officials needed 
access to vast quantities of proprietary, nonpublic data and 
information about individual firms, the state of the economy, and 
upcoming Fed actions. Under these circumstances, for Fed officials to 
actively trade in the market raises legitimate questions about 
conflicts of interest and insider trading.
  These Fed officials' actions show, at a minimum, very bad 
judgment. They also suggest that some Fed officials believe that 
building up their own personal wealth is more important than 
strengthening the American people's confidence in the Fed.

  In his years as Chair of the Fed, it is not clear why Mr. Powell did 
not take steps to prevent these activities. Surely, he understands that 
this kind of behavior by Fed officials corrodes the public trust in the 
Fed and that, in turn, such corrosion undermines the effectiveness of 
the Fed.
  Surely, he understands that the Fed officials' trades run afoul of 
Agency guidelines, which state Fed officials should ``avoid any 
dealings or other conduct that might convey even an appearance of 
conflict between their personal interests, the interests of the 
[Federal Reserve] System, and the public interest.''
  Surely, he knows that, according to the Fed's policies, its officials 
``have a special responsibility for maintaining the integrity, dignity, 
and reputation of the System. Accordingly, they should scrupulously 
avoid conduct that might in any way tend to embarrass the System.''
  Surely he is aware that the Fed's policies instruct officials to 
``carefully adhere to the spirit, as well as the letter, of the rules 
of ethical conduct,'' and to ``exemplify in their own conduct the high 
standards set forth in those rules.''
  As the sitting chair of the Federal Reserve, the responsibility to 
safeguard the integrity of the Federal Reserve rests squarely with him. 
Setting the right culture at the Fed and making sure safeguards are in 
place to prevent self-dealing and to protect the public's confidence 
should be the minimum standard any Federal Reserve Chair should meet. 
And once there is a problem, a quick and aggressive response is 
critical. Chair Powell has failed at both tasks.
  Last week, I said that I would not support Chair Powell's 
renomination because in one decision after another, he has consistently 
failed to serve as an effective financial regulator. But that is not 
his only failure.
  Chair Powell has also failed as a leader. Our Nation needs leaders 
who are willing to set aside and enforce strong ethics standards and 
who act swiftly when a problem arises.
  Our Nation does not need a go-along-to-get-along leader who doesn't 
know or doesn't care when, on his watch, people with great 
responsibility advance their own interests over the interests of our 
Nation, or someone who drags his feet in dealing with problems that 
shake the public's confidence in the institution he leads.
  We need changes at the Fed. I have already called on key Fed 
officials to voluntarily abide by stricter ethics standards. Yesterday, 
I asked the SEC to investigate these trades to determine whether these 
Fed officials may have broken laws on insider trading, and I will 
continue to push Chair Powell to vigorously enforce the ethics 
standards that already exist and to put stronger ethics standards in 
place at the Fed.
  In the last Congress, I introduced sweeping ethics legislation, the 
Anti-Corruption and Public Integrity Act. This legislation would ban 
all individual stock ownership by Members of Congress, by Cabinet 
Secretaries, by senior congressional staff, by Federal judges, by White 
House staff, and by other Agency officials while in office.
  It would prohibit all government officials from holding or trading 
stock if its value might be influenced by their Agency, their 
department, or their actions. And it would require senior government 
officials and White House staff to divest from privately owned assets 
that would present conflicts of interest. This far-reaching legislation 
would also tighten conflict of interest and recusal requirements and 
shut the revolving door between industry and government.
  Now, look, this proposal won't solve every problem. And for any 
officials who have engaged in illegal insider trading, we don't need a 
new law to hold them accountable. But the proposal would dramatically 
reduce the possibility for any appearance of impropriety at the Fed and 
at every other Federal Agency and in Congress and in the White House.
  I urge Congress to pass this legislation and to restore Americans' 
trust in our elected leaders and the officials who make key decisions--
key decisions not only about the economy, but about public health, the 
environment, and every other aspect of government.
  There is a lot of housekeeping we need to do, and the faster we 
start, the faster we get it done.
  I yield the floor.

[[Page S6900]]

  The PRESIDING OFFICER. The Republican whip.
  Mr. THUNE. Mr. President, I ask unanimous consent that I be able to 
complete my remarks and that Senator Burr also be able to complete his 
remarks before the vote starts.
  The PRESIDING OFFICER. Without objection, it is so ordered.