White House Team Weighing Fed Sees No Issue With Powell Trades
(Bloomberg) -- Top White House officials don’t believe that Federal Reserve Chair Jerome Powell’s sale of shares in a stock index fund last year disqualifies him from being appointed to a second term, according to people familiar with the matter.
Several key officials working on the nomination saw no reason for concern over Powell’s trading, according to people familiar with the deliberations. No one has brought up Powell’s trades in the meetings among a tight circle of advisers on the Fed chair search, two of the people said.
President Joe Biden has said he will decide “fairly quickly” on his Fed chair pick, and met last week with both Powell and Fed Governor Lael Brainard at the White House, people familiar with the search said. Powell’s term as chair expires in February.
Indications of the White House thinking on the trading situation don’t mean Powell will get the nomination. But they do suggest that area of contention over the current chair has receded.
Some within the administration who support Brainard for chair are still concerned about the trades, the people said.
Powell sold a stock index fund worth between $1 million and $5 million last October. The transaction was outside the Fed’s blackout period and months after the Fed had set its pandemic monetary policy.
Treasury Secretary Janet Yellen, who over the summer told the White House of her recommendation to reappoint Powell, does not want to see the choice of Fed chair to become politicized, according to people familiar with her thinking. She also values continuity of leadership, they said.
The White House did not respond to requests for comment. Communications staff at the Treasury Department and a Fed spokesperson declined to comment.
Some progressives have drawn attention to the trades to build the case for Brainard to replace Powell. Liberal columnist Robert Kuttner at the American Prospect raised questions about the propriety of the sales in a column last month.
In addition to Powell’s trade, two regional bank presidents left the Federal Reserve this year following disclosures of extensive trading in 2020. Powell has since launched a sweeping ethics overhaul at the Fed that will restrict trading by senior Fed officials. Some Democrats in Congress have also proposed legislation to ban stock trading by Fed officials.
If Brainard is nominated for the chair, she would likely also face questions about the trading scandal, given that she chairs the committee overseeing the regional banks, a point raised recently by the top Republican on the Senate Banking Committee, Pat Toomey of Pennsylvania.
“This episode does raise questions about the operations of the Committee on Federal Reserve Bank Affairs, which is chaired by Governor Brainard and is directly responsible for overseeing the Fed regional banks and their presidents,” Toomey said in a statement praising Powell when he announced the new trading curbs.
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