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Three Democratic senators asked the Federal Reserve's internal watchdog to investigate whether Vice Chair Michelle Bowman violated ethics rules by speaking at a private Bank of America dinner during the central bank's blackout period.
Senator Elizabeth Warren and two fellow Democrats asked the Federal Reserve's inspector general Wednesday to review whether Vice Chair for Bank Supervision Michelle Bowman broke central bank rules by speaking at a private Bank of America dinner for clients last month, an event that fell within the Fed's post-meeting blackout period.
"We request that the Office of Inspector General investigate whether Vice Chair Bowman's attendance or comments violated any statutes, rules, regulations, policies, or procedures and whether the Fed's existing framework governing such external events should be strengthened," Warren, the top Democrat on the Senate Banking Committee, wrote in a letter to Inspector General Michael Horowitz. Senators Jack Reed of Rhode Island and Chris Van Hollen of Maryland also signed the letter.
The Wall Street Journal reported that Bowman spoke at the invitation-only dinner on the evening of June 17, hours after the Federal Open Market Committee said it was leaving interest rates unchanged. More than 20 business leaders and investors attended the closed-door event. Bowman has said she did not discuss monetary policy at the dinner and has "consistently complied with all applicable FOMC and ethics rules." Without pointing to any specific matter, Bowman said the Journal's story had unfairly characterized the event. A spokesman for Horowitz declined to comment.
The request threatens to deepen scrutiny of Fed governance at a time when Chair Kevin Warsh is already reshaping the central bank's communications framework. Patrick Harker, who led the Philadelphia Fed for a decade before stepping down, said last month that he was barred from such events during his tenure and that the episode "deserves a serious, transparent answer from the institution."
The FOMC held the federal funds rate at its current level at the June 17 meeting, where the committee also released updated economic projections. The blackout period, which begins the second Saturday before each policy meeting and ends the Thursday after, restricts officials from publicly commenting on monetary policy or the economy. Bowman's appearance at a bank-hosted client event during that window has raised questions about whether the rules governing official interactions with financial institutions are sufficiently clear.
The outcome of the inspector general's review could lead to tighter restrictions on Fed officials' participation in private events hosted by banks they supervise. Bowman, as vice chair for bank supervision, oversees the Fed's regulatory and supervisory functions for the largest U.S. lenders, including Bank of America, which held about $2.5 trillion in assets as of the first quarter. Any finding that she violated ethics rules could undermine confidence in the independence of the Fed's bank supervision function and fuel calls for broader governance reforms at the central bank.
This article is for informational purposes only and does not constitute investment advice.
