The Federal Reserve is imposing new restrictions on investments by its senior officials as it seeks to address a controversy involving trades made by two regional Fed bank presidents last year.

The new rules prohibit policymakers and senior staff at the Fed from buying individual stocks. They're also barred from holding individual bonds as well as other market products including derivatives or any investments involving government-backed securities.

Broad-based investments such as mutual funds are still allowed, but they must be held for at least a year. Additionally, any purchase or sale must be approved in advance and reported to the public within 30 days. Trading is also prohibited during times of heightened market stress

Fed chairman Jerome Powell said the rules — covering both the central bank and the regional Fed banks — are designed to guard against even the appearance of conflicts of interest.

"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 in the statement.

Powell had ordered a review of the central bank's trading rules after active trading by the two regional bank presidents came to light last month.

Robert Kaplan, who ran the Dallas Federal Reserve Bank, bought or sold stock worth more than a million dollars last year in each of nearly two dozen companies, including Amazon, Kraft Heinz and Delta Airlines.

Eric Rosengren, who ran the Boston Federal Reserve Bank, bought or sold securities tied to real estate.

The trades came at a time when the Fed was pouring trillions of dollars into financial markets.

While both men defended their trading as being in compliance with existing ethics rules, they have since announced their retirements. Kaplan acknowledged the trading could be a distraction for the Fed, while Rosengren cited health reasons.

Critics have also questioned trades made by Powell himself last year, as well as Fed vice chairman Richard Clarida.

The controversy has been a black eye for the central bank and some analysts believe it could weigh on Powell's chances to be nominated for a second term.

Dennis Kelleher, who heads the financial transparency group Better Markets, said broader reforms are still needed at the Fed.

"The new rules are a good start, but they don't go far enough," Kelleher said.

He argued that trading restrictions should apply not just to senior staff but anyone at the Fed with access to non-public information. What's more, he said senior leaders should be barred from trading entirely, and required to put their investments in a blind trust.

Kelleher also demanded a fuller accounting of trades that occurred in the past.

"The Fed has to stop stonewalling the many requests to disclose all the information and documents about the trading that has been done during the pandemic," Kelleher said.

The Fed's Inspector General is conducting an independent review.

Powell had already been facing some opposition to his reappointment. Sen. Elizabeth Warren, D-Mass., called him a "dangerous man" to lead the Fed, saying he has not been tough enough on bank regulations.

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