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That story says that Powell had owned a relatively small allocation of munis for years, before the Fed bought munis as part of QE triggered by an unexpected pan

That story says that Powell had owned a relatively small allocation of munis for years, before the Fed bought munis as part of QE triggered by an unexpected pandemic, which makes perfect sense given their aims. Very hard to call that insider trading in general, and it hardly even seems morally dubious compared to what people like Pelosi seem to be up to.

grey-area 5y ago
The chairman of the fed simply shouldn’t own the assets the fed might buy. That’s a clear conflict of interest. But you’re right there are more clearly corrupt officials including two fed presidents. This is a systemic problem of poor enforcement and violated norms. The rule of law matters and regulators should be above reproach.
- dageshi 5y ago
  The issue is I suppose, what can a Fed chairman invest his/her personal money in that absolves him/her of a conflict of interest? The fed's policies affect every area of the financial system. Can't put it in a bank because they'll almost certainly be above the insured amount and will have an incentive to bail out that bank if it's in trouble, another conflict of interest. Perhaps some special account at the fed that pays a specific interest rate and is fully insured? But then why do Fed presidents get special access to such an account that normal folks don't? I don't know that there is anywhere he could put his money and be above reproach, him putting his money in muni's seems like a good faith effort to do that though.
  - grey-area 5y ago
    Well it did seem a good place till the fed started massively distorting the bond markets in a ‘temporary’ measure which has so far lasted a decade.
    - dageshi 5y ago
      That's not an answer to the question. Where does the person who is responsible for the smooth running of the financial system put their money so they have no conflict of interest? Because otherwise it's easy to just cynically say he's lining his own pockets when in practice the position inherently makes it impossible to have zero conflicts of interest.
      - grey-area 5y ago
        You gave some suggestions yourself. The fed could invest in an independent fund for such a purpose, they could invest elsewhere in the world. This is not a difficult problem and it is already heavily enforced for smaller fish in the financial ecosystem - e.g. traders at financial institutions are highly regulated. Anything would be better than buying the very assets they are meant to oversee. You’re defending the indefensible here with sophistry about how hard it is to be honest and avoid double dealing. These fed presidents dealt in the very securities they had inside information on.
        dageshi 5y ago
        They can't invest elsewhere in the world, interest rates have a direct effect on currency values and therefore the value of their investments, conflict of interest. Traders in financial institutions can invest in assets outside their job and likely those traders don't have the financial muscle to move the values of entire sectors the way the fed can. Again, there is nowhere existing at present that a Fed chairman can invest that is outside his/her influence, nowhere there is no conflict of interest in the current financial system. The only real solution is some kind of defined fed official only fund as you and I have both suggested. But while this would get rid of conflict of interest it enters into an issue of equality of why should fed officials get guaranteed safe investments when the public at large do not, which is why it's probably never been done.
        TomSwirly 5y ago
        You know, most people simply don't have these issues because they aren't incredibly rich. An even simpler solution would be to hire someone for this position _who lived off their salary._ The idea that these positions always have to be given to fabulously rich people is why America is in the crappy position it is now.
  - magicalhippo 5y ago
    Recently we got a new leader of our "oil fund"[1] here in Norway. The new guy, Nicolai Tangen, had started a hedge fund which he managed and there was a big discussion regarding his personal finances, given the likelihood of conflict of interest. It ended[2] up with him transferring his personal assets to a bank account and the ownership of the hedge fund to a charity foundation he had started long before this. [1]: https://en.wikipedia.org/wiki/Government_Pension_Fund_of_Norway#Government_Pension_Fund_Global https://en.wikipedia.org/wiki/Government_Pension_Fund_of_Nor... [2]: https://www.norges-bank.no/en/news-events/news-publications/News-items/2020/2020-12-02-agreement/ https://www.norges-bank.no/en/news-events/news-publications/...
  - xg15 5y ago
    > Perhaps some special account at the fed that pays a specific interest rate and is fully insured? But then why do Fed presidents get special access to such an account that normal folks don't? That seems like a solution. And yes, some leadership positions require you to restrict your private activities outside the job. Before Trump, it also used to be common courtesy that the president-elect published his tax returns and removed himself from all projects that could lead to a conflict of interest.
  - alanlammiman 5y ago
    a blind trust
  - pauldenton 5y ago
    How about Treasury bonds. At the same rate as everybody else, no special treatment.

grey-area 5y ago

The chairman of the fed simply shouldn’t own the assets the fed might buy. That’s a clear conflict of interest. But you’re right there are more clearly corrupt officials including two fed presidents. This is a systemic problem of poor enforcement and violated norms. The rule of law matters and regulators should be above reproach.

dageshi 5y ago
The issue is I suppose, what can a Fed chairman invest his/her personal money in that absolves him/her of a conflict of interest? The fed's policies affect every area of the financial system. Can't put it in a bank because they'll almost certainly be above the insured amount and will have an incentive to bail out that bank if it's in trouble, another conflict of interest. Perhaps some special account at the fed that pays a specific interest rate and is fully insured? But then why do Fed presidents get special access to such an account that normal folks don't? I don't know that there is anywhere he could put his money and be above reproach, him putting his money in muni's seems like a good faith effort to do that though.
- grey-area 5y ago
  Well it did seem a good place till the fed started massively distorting the bond markets in a ‘temporary’ measure which has so far lasted a decade.
  - dageshi 5y ago
    That's not an answer to the question. Where does the person who is responsible for the smooth running of the financial system put their money so they have no conflict of interest? Because otherwise it's easy to just cynically say he's lining his own pockets when in practice the position inherently makes it impossible to have zero conflicts of interest.
    - grey-area 5y ago
      You gave some suggestions yourself. The fed could invest in an independent fund for such a purpose, they could invest elsewhere in the world. This is not a difficult problem and it is already heavily enforced for smaller fish in the financial ecosystem - e.g. traders at financial institutions are highly regulated. Anything would be better than buying the very assets they are meant to oversee. You’re defending the indefensible here with sophistry about how hard it is to be honest and avoid double dealing. These fed presidents dealt in the very securities they had inside information on.
      - dageshi 5y ago
        They can't invest elsewhere in the world, interest rates have a direct effect on currency values and therefore the value of their investments, conflict of interest. Traders in financial institutions can invest in assets outside their job and likely those traders don't have the financial muscle to move the values of entire sectors the way the fed can. Again, there is nowhere existing at present that a Fed chairman can invest that is outside his/her influence, nowhere there is no conflict of interest in the current financial system. The only real solution is some kind of defined fed official only fund as you and I have both suggested. But while this would get rid of conflict of interest it enters into an issue of equality of why should fed officials get guaranteed safe investments when the public at large do not, which is why it's probably never been done.
        TomSwirly 5y ago
        You know, most people simply don't have these issues because they aren't incredibly rich. An even simpler solution would be to hire someone for this position _who lived off their salary._ The idea that these positions always have to be given to fabulously rich people is why America is in the crappy position it is now.
- magicalhippo 5y ago
  Recently we got a new leader of our "oil fund"[1] here in Norway. The new guy, Nicolai Tangen, had started a hedge fund which he managed and there was a big discussion regarding his personal finances, given the likelihood of conflict of interest. It ended[2] up with him transferring his personal assets to a bank account and the ownership of the hedge fund to a charity foundation he had started long before this. [1]: https://en.wikipedia.org/wiki/Government_Pension_Fund_of_Norway#Government_Pension_Fund_Global https://en.wikipedia.org/wiki/Government_Pension_Fund_of_Nor... [2]: https://www.norges-bank.no/en/news-events/news-publications/News-items/2020/2020-12-02-agreement/ https://www.norges-bank.no/en/news-events/news-publications/...
- xg15 5y ago
  > Perhaps some special account at the fed that pays a specific interest rate and is fully insured? But then why do Fed presidents get special access to such an account that normal folks don't? That seems like a solution. And yes, some leadership positions require you to restrict your private activities outside the job. Before Trump, it also used to be common courtesy that the president-elect published his tax returns and removed himself from all projects that could lead to a conflict of interest.
- alanlammiman 5y ago
  a blind trust
- pauldenton 5y ago
  How about Treasury bonds. At the same rate as everybody else, no special treatment.