Apparently it’s not obvious enough.
Last week, James Bullard, chairman of the Federal Reserve Bank of St. Louis and voting member of the Federal Open Market Committee, delivered a speech on the sidelines of the annual meetings of the International Monetary Fund and the World Bank. It was not a public address. Bullard spoke at a private event that Citigroup Inc. – a Fed-supervised bank – had organized for a select group of clients, without any invited media. His comments reportedly focused on monetary policy and financial stability, topics that could hardly be of greater importance in this time of global market volatility.
The St. Louis Fed pointed out that Bullard received no compensation, made similar remarks publicly before and after, and attended the event in the past. Yet neither apology mitigates the fundamental transgression: the exclusive time with Bullard clearly had value for those present and for Citigroup, which means he effectively allowed his public position to be used for private gain. The suggestion that he has done this before – that such occurrences are routine – makes the optics even worse.
How should the Fed react?
A similar incident last year should be instructive. When it emerged that some Fed officials had made securities transactions in 2020, at a time when the central bank was undertaking emergency interventions that affected the value of these securities, the Fed faced a dilemma. As with Bullard, the actions of officials may not have violated the letter of the relevant codes of conduct. But they were clearly inappropriate – so the Fed reviewed and rewrote the rules.
The Bullard incident deserves the same response. Fed officials should be allowed to hold private meetings for the purpose of gleaning information on what is happening in the markets and the economy. They shouldn’t be allowed to share their views on monetary policy in a closed forum, let alone a forum organized by a for-profit company that the Fed itself is supposed to regulate. The rules should change – and the Fed should ensure that no policymaker gives away what rightly belongs to the public.
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The editors are members of the Bloomberg Opinion Editorial Board.
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