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Fed to ban policymakers from owning individual stocks

cnbc.com

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Re: Fed to ban policymakers from owning individual stocks

#41

Post by gnopgnip »

lastofthemojito wrote: post #6
trident5000 wrote: post #4

How about their relatives and more important the head of their trusts who they can just instruct or pass information to under the table. This is a great first step but I'd encourage looking behind the headline. Also the last time there was any rule about congress insider trading they just waited until nobody was looking anymore and revoked it.

As I understand it the STOCK Act hasn't been revoked, but members of Congress regularly ignore it and have never been punished for doing so: https://www.npr.org/2021/09/22/1039287987/outside-ethics-gro...

It is true that the small fines for violating the STOCK Act aren't an issue. But the SEC prosecuted Congressman Christopher Collins and a few others for insider trading

Re: Fed to ban policymakers from owning individual stocks

#42

Post by newaccount2021 »

FormerBandmate wrote: post #20
awb wrote: post #7

The relatively low salaries compared to the huge amounts of power is almost begging for insider trading, influence peddling, etc. > The salary of a Congress member varies based on the job title of the congressman or senator. Most senators, representatives, delegates and the resident commissioner from Puerto Rico make a salary of $174,000 per year. https://www.indeed.com/career-advice/pay-salary/congressman-... Then a…

Honestly, we should give the Federal Reserve performance-based pay. Elon Musk has literally been paid billions for Tesla's phenomenal stock outperformance, why shouldn't we pay the Fed Chairs tens of millions for sustained real GDP growth above 4% balanced with low wealth inequality, low inflation, and low unemployment? They have the most important job in America and they should be paid like it if they do well

Heavyweight industry chops are a prerequisite for a Fed board job, none of them is a pauper.

Re: Fed to ban policymakers from owning individual stocks

#43

Post by handmodel »

srcreigh wrote: post #30
errantmind wrote: post #22

Earlier quoted context omitted.

This breaks down when multi-term policy decisions need to be made. This would only push them to kick the can down the road

What if they are paid based on performance in 10 years, after they are out?

Would certainly be better but I would say ten years is not a crazy long time when it comes to borrowing decisions that often have 30 years timetables.

Also doesn't capture in the the unequalness of gains. Which is better - the fed doing something that has 90% chance of huge gains or a 10% chance of catastrophic economy shattering loss? Or an 80% chance of huge gains and a 20% chance of gains netting 0? The first is much more desirable if maximizing a bonus and could be tempting - but I dont think we want that risk.

Re: Fed to ban policymakers from owning individual stocks

#44

Post by DavidPeiffer »

jrockway wrote: post #24
N0tAThr0wAway wrote: post #21

Someone once told me that a stipulation for public service should involve converting all your holdings into index funds only. Thought that was an interesting proposal.

Not sure that's necessarily fair. If you're 75, you probably don't want your retirement nest egg in 100% stocks. There isn't a policy congress could institute that guarantees stocks will retain their value in a 4 year window.

Index funds aren't necessarily 100% stocks. A basic target date fund will taper down the stock percentage as you get closer to the targeted retirement date, not to mention the myriad of dedicated bond funds with every focus/tilt you can imagine.

Re: Fed to ban policymakers from owning individual stocks

#45

Post by tshaddox »

davesque wrote: post #38
awb wrote: post #7

The relatively low salaries compared to the huge amounts of power is almost begging for insider trading, influence peddling, etc. > The salary of a Congress member varies based on the job title of the congressman or senator. Most senators, representatives, delegates and the resident commissioner from Puerto Rico make a salary of $174,000 per year. https://www.indeed.com/career-advice/pay-salary/congressman-... Then a…

Yeah, the other day this really hit home for me. I don't know why I hadn't previously thought about it in such clear terms. Being a congressperson has to be one of the most morally hazardous occupations in the world. I mean, you have more direct control over how our entire society works than almost anyone else. So you become the perfect target for bribery and gain access to countless levers that you could pull in you…

How about just actually making the bad stuff illegal and actually investigating and prosecuting it? Note that we’re discussing known bad things that congresspeople are doing.

Re: Fed to ban policymakers from owning individual stocks

#46

Post by louloulou »

davesque wrote: post #38
awb wrote: post #7

The relatively low salaries compared to the huge amounts of power is almost begging for insider trading, influence peddling, etc. > The salary of a Congress member varies based on the job title of the congressman or senator. Most senators, representatives, delegates and the resident commissioner from Puerto Rico make a salary of $174,000 per year. https://www.indeed.com/career-advice/pay-salary/congressman-... Then a…

Yeah, the other day this really hit home for me. I don't know why I hadn't previously thought about it in such clear terms. Being a congressperson has to be one of the most morally hazardous occupations in the world. I mean, you have more direct control over how our entire society works than almost anyone else. So you become the perfect target for bribery and gain access to countless levers that you could pull in you…

Welcome to the libertarian/small government world view!

Re: Fed to ban policymakers from owning individual stocks

#47

Post by 99_00 »

awb wrote: post #7

The relatively low salaries compared to the huge amounts of power is almost begging for insider trading, influence peddling, etc. > The salary of a Congress member varies based on the job title of the congressman or senator. Most senators, representatives, delegates and the resident commissioner from Puerto Rico make a salary of $174,000 per year. https://www.indeed.com/career-advice/pay-salary/congressman-... Then a…

If Jerome Powell was greedy he would simply get a job in the private sector.

Anyone who is capable of getting the job as Fed Chairman will have no problem making a lot, easily and legally.

Believe it or not, some people go into public service with the desire to serve the public. Sometimes there are people who have already achieved tremendous financial success.

Re: Fed to ban policymakers from owning individual stocks

#48

Post by dghlsakjg »

davesque wrote: post #38
awb wrote: post #7

The relatively low salaries compared to the huge amounts of power is almost begging for insider trading, influence peddling, etc. > The salary of a Congress member varies based on the job title of the congressman or senator. Most senators, representatives, delegates and the resident commissioner from Puerto Rico make a salary of $174,000 per year. https://www.indeed.com/career-advice/pay-salary/congressman-... Then a…

Yeah, the other day this really hit home for me. I don't know why I hadn't previously thought about it in such clear terms. Being a congressperson has to be one of the most morally hazardous occupations in the world. I mean, you have more direct control over how our entire society works than almost anyone else. So you become the perfect target for bribery and gain access to countless levers that you could pull in you…

Singapore does a good job of matching public servant pay to private sector pay for that exact reason. They go so far as to index government pay scales to private sector pay.

The entire intent is to attract very talented people that want to do a good job. Having access to the levers of power is much less of an incentive as a (theoretical) result.

Re: Fed to ban policymakers from owning individual stocks

#49

Post by bcrosby95 »

gnopgnip wrote: post #33
slowmovintarget wrote: post #9

Earlier quoted context omitted.

I don't think they can. Current law in that respect does not apply to members of Congress, IIRC. Instead, Congress has decided that its members should: 1. Self-report on themselves, their spouses, their dependent children (why dependent children would be trading securities is beyond me, but OK.) 2. Be subject to a $200 fine for conflicts of interest or failure to report "in a timely manner" 3. Have the fine waived at…

The SEC can still pursue criminal charges

Criminal charges for what exactly? The SEC exists by authority of Congress, and their purview is defined by Congress, just like every other regulatory body.

Re: Fed to ban policymakers from owning individual stocks

#50

Post by spaetzleesser »

Factorium wrote: post #15
awb wrote: post #7

The relatively low salaries compared to the huge amounts of power is almost begging for insider trading, influence peddling, etc. > The salary of a Congress member varies based on the job title of the congressman or senator. Most senators, representatives, delegates and the resident commissioner from Puerto Rico make a salary of $174,000 per year. https://www.indeed.com/career-advice/pay-salary/congressman-... Then a…

This is the case all over the Western world. Federal Government politician salaries need to be 10x higher.

That’s very dangerous. If they make that much money they will have even less understanding of how the average citizen lives. That’s already a big problem. I wouldn’t want to make it worse.
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