Federal Reserve Board Member and Conflicts

There must be some brain function that turns off as folks climb the ranks of power. They can’t see a conflict to save their lives, or even just their careers. Three senior Federal Reserve officials were dabbling in individual stock trades, with some of the transactions occurring on the eve of Fed announcements on interest rates. See, if you know what the Fed is going to say before it says so, you can position yourself favorably the day before and not take the hits the other poor schlubs do. Schlubs would be those just trying to scrimp and limp along as they squirrel away shekels for their retirements.

Congress is demanding an investigation and clearly wants heads to roll. Meanwhile, the chair of the Federal Reserve is begging Congress to leave it alone and let them solve the problem. Here’s the problem with the Fed solving the problem. They are quick to poo-poo the allegations, calling the officials’ trading actions “pre-planed” so that they could not possibly cross any lines. If Fed officials are dabbling in individual stock trades it is impossible for them to defend themselves. Talking yourself blue in the face will not convince those following along at home that the powerful are not corruptly trading, using the policies they have developed to protect them from conflicts allegations and investigations.

The resignations were necessary and appropriate. Going forward, the Fed will need to take affirmative steps to remove those who are trading in individual stocks in their personal portfolios. It’s an Alfred E. Newman moment, “What me worry?” followed by, “You just don’t understand.” Sure don’t — because we understand conflicts. This is a “Don’t do it,” because disclosing the trades, which they did not do until discovered by reporters, would raise eyebrows and questions. Right there, that’s all you need to know about conflicts.

About mmjdiary

Professor Marianne Jennings is an emeritus professor of legal and ethical studies from the W.P. Carey School of Business at Arizona State University, retiring in 2011 after 35 years of teaching undergraduate and graduate courses in ethics and the legal environment of business. During her tenure at ASU, she served as director of the Joan and David Lincoln Center for Applied Ethics from 1995-1999. In 2006, she was appointed faculty director for the W.P. Carey Executive MBA Program. She has done consulting work for businesses and professional groups including AICPA, Boeing, Dial Corporation, Edward Jones, Mattel, Motorola, CFA Institute, Southern California Edison, the Institute of Internal Auditors, AIMR, DuPont, AES, Blue Cross Blue Shield, Motorola, Hy-Vee Foods, IBM, Bell Helicopter, Amgen, Raytheon, and VIAD. The sixth edition of her textbook, Case Studies in Business Ethics, was published in February 2011. The ninth edition of her textbook, Business: lts Legal, Ethical and Global Environment was published in January 2011. The 23rd edition of her book, Business Law: Principles and Cases, will be published in January 2013. The tenth edition of her book, Real Estate Law, will also be published in January 2013. Her book, A Business Tale: A Story of Ethics, Choices, Success, and a Very Large Rabbit, a fable about business ethics, was chosen by Library Journal in 2004 as its business book of the year. A Business Tale was also a finalist for two other literary awards for 2004. In 2000 her book on corporate governance was published by the New York Times MBA Pocket Series. Her book on long-term success, Building a Business Through Good Times and Bad: Lessons from Fifteen Companies, Each With a Century of Dividends, was published in October 2002 and has been used by Booz, Allen, Hamilton for its work on business longevity. Her latest book, The Seven Signs of Ethical Collapse was published by St. Martin’s Press in July 2006 and has been a finalist for two book awards. Her weekly columns are syndicated around the country, and her work has appeared in the Wall Street Journal, the Chicago Tribune, the New York Times, Washington Post, and the Reader's Digest. A collection of her essays, Nobody Fixes Real Carrot Sticks Anymore, first published in 1994 is still being published. She has been a commentator on business issues on All Things Considered for National Public Radio. She has served on four boards of directors, including Arizona Public Service (1987-2000), Zealous Capital Corporation, and the Center for Children with Chronic Illness and Disability at the University of Minnesota. She was appointed to the board of advisors for the Institute of Nuclear Power Operators in 2004 and served on the board of trustees for Think Arizona, a public policy think tank. She has appeared on CNBC, CBS This Morning, the Today Show, and CBS Evening News. In 2010 she was named one of the Top 100 Thought Leaders in Business Ethics by Trust Across America. Her books have been translated into four different languages. She received the British Emerald award for authoring one of their top 50 articles in management publications, chosen from over 15,000 articles. Personal: Married since 1976 to Terry H. Jennings, Maricopa County Attorney’s Office Deputy County Attorney; five children: Sarah, Sam, and John, and the late Claire and Hannah Jennings.
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