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Federal Reserve cracks down on how its officials invest

Washington — The Federal Reserve is imposing sweeping new restrictions on the investments its officials can own, a response to questionable recent trades that forced two top Fed officials to resign.

The Fed announced Thursday that policymakers and senior staff would be barred from investing in individual stocks and bonds. They would also have to provide 45 days' advance notice of any trade; receive prior approval from ethics officials; and be required to hold the investments for at least a year. In addition, officials would be barred from selling investments during periods of heightened financial market stress.

As a result, Fed officials would essentially be restricted to holding mutual funds.

"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," said Federal Reserve Chair Jerome Powell said in a statement

Last month, two presidents of regional Fed banks, Robert Kaplan and Eric Rosengren, announced their resignations after it was revealed that they had traded stocks and funds in 2020 at the same time that the Fed was taking expansive steps to calm markets during the pandemic recession.

Under the central bank's new policy, Reserve Bank president will be required to disclose financial transactions within 30 days.

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