Following the resignations of the heads of both the Federal Reserve Bank of Boston and the Federal Reserve Bank of Dallas, the Fed announced new trading regulations for senior staff and board members.

Robert Kaplan, former president of Reserve Bank of Dallas, resigned soon after former Reserve Bank of Boston’s President and CEO Eric Rosengren announced his resignation. They both stepped down following controversy regarding a conflict in interest. The two were also seen selling stocks in large quantities before the pandemic., Both former presidents stated that they were doing this in order to avoid conflict of interest, not to create it.

On Oct. 21 the Fed announced new restrictions on trading for its senior staff and board members. These rules include but are not limited to: the inability for board members and senior staff to buy  individual stocks, bonds and option futures or other derivative investments. Senior staff and board members will be limited to investing in mutual funds. In the case they invest in one, they are to hold their position for at least a year. In addition to holding their position for a year, before buying or selling, they must give a 45-day notice to get clearance from the Fed.

These rules are a great initiative from the Fed and its chair, Jerome Powell, to limit future conflicts of interest and keep the focus of the Fed on public service. “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,” Powell said.

Despite the positive outcome, Powell’s swift action raised concerns about his intentions. The current chairman’s four-year term comes to an end in February, and there are implications that several White House aides are encouraging President Joe Biden to reappoint Powell as Fed chair.

Many politicians, such as Sen. Elizabeth Warren, have argued that these regulations are not enough. She expressed in a tweet that trading individual stocks should be illegal. Warren also encouraged the Fed to make its ethical guidelines public, along with a request for the Fed to forgo a more in-depth investigation into those involved with the recent resignations.

Rosengren and Kaplan are not the only ones sparking speculation of conflict of interest and corruption in the media. A recent investigation regarding131 Federal judges, published by the Wall Street Journal, also suggested infringement in regards to the law. These judges were found to have conflicts of interest in the same stocks that they were passing legislation on.  A lack of regulations on Congress members regarding trading has also come to light recently.

Even with the new regulations in place for government officials regarding trading, the real questions are how effective they will be and why they did not exist before.