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Opinion
The Editors

The Federal Reserve Needs to Get Its Ethics Straight

If two top officials can exercise such bad judgment, the rules need to be stronger and clearer.

It should stand for probity.

It should stand for probity.

Photographer: Brendan Smialowski/Bloomberg

The Federal Reserve is scrambling to deal with an urgent question: Should its officials be allowed to trade in the securities of companies and other issuers that their decisions might affect? The answer ought to be obvious. No, they shouldn’t.

The central bank’s conflict-of-interest rules have come under scrutiny because of the uproar over the trading activity of two officials, Dallas Fed President Robert Kaplan and Boston Fed President Eric Rosengren. Last year, as the Fed took extraordinary action to support everything from individual companies to entire markets, Kaplan moved millions of dollars in and out of myriad investments including shares of Amazon and Johnson & Johnson, a bond fund and S&P 500 index futures. Rosengren bought and sold shares in four real-estate investment trusts, among other trades.