Federal Reserve Bank of St. Louis President James Bullard's reported speaking engagement at an invitation-only private event hosted by Citigroup last Friday may have violated the central bank's communications guidelines, central bank watchers said.
Bullard, a voting member of the Federal Open Market Committee this year, spoke about monetary policy and the economy during an event on the sidelines of the annual meetings of the World Bank and International Monetary Fund in Washington, The New York Times reported Thursday.
The St. Louis Fed declined to immediately comment on the report. A spokesperson for the bank told The New York Times that he wasn't compensated for the speech. Citi and the Fed Board of Governors in Washington both declined to comment.
The presidents of the 12 Fed regional banks typically announce speaking engagements in advance and invite media to attend, and in recent years they have often released texts of speeches or presentations and webcast their remarks.
Bullard is closely followed by Wall Street and comments frequently in public and in press interviews.
Even if there was nothing new disclosed to Citi clients, Bullard's appearance could be seen as a violation of Fed rules on communications that aim to avoid providing a profit-making firm with an advantage by allowing them to get clients close to a policymaker.
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The rules also cite some examples that would be inconsistent with the Fed's policies, including "a private meeting with selected clients of a profit-making entity to discuss monetary policy.
"The appearance suggests the rules need to be clarified and strengthened, said Andrew Levin, a Dartmouth College professor and former special advisor to the Fed's board. He noted there is no enforcement mechanism on how to deal with a violation.
"I do view this as an ethics violation," he said. "This clearly gave a prestige advantage to Citi. This gave the appearance of privileged access, even if there was no substantive information provided."
Bullard said in a Reuters interview on Friday that he backed another 75-basis-point hike at the Fed meeting in early November, if the gathering was being held that day, and favored additional front-loading of rate hikes to counter high inflation. He also spoke during a panel discussion, announced in advance, the following day in Washington.
The incident adds to the ethics issues to dog the Fed in recent months, including the early retirement of two regional Fed presidents following revelations last year of unusual securities trading.
Last Friday, the central bank
"Whether or not Bullard's behavior violates specific policies is more an indictment of the Fed's policies," said Peter Conti-Brown, associate professor at the University of Pennsylvania's Wharton School. "Private bank client events should not include public officials, a category that certainly includes Reserve Bank presidents."
"The Fed is still reeling from the stench of ethics trading scandals that it had hoped were in the past," Conti-Brown said.
