You should assume that no one read the article. I certainly did not before coming to read the comments (although I have enough restraint to not comment myself on the substance of it when I do that).
For better or worse, the title and the link is just a discussion prompt. The guidelines all but state that you're not expected to read it before commenting:
> Please don't comment on whether someone read an article. "Did you even read the article? It mentions that" can be shortened to "The article mentions that."
In this case, someone should probably edit the title.
I certainly don't read the article most of the time. The comments here are more interesting than the post. They're what I come here for. Besides, it's nearly certain that any important information will be directly quoted here in a comment.
I think that this is a fantastic start, but I agree that this should be extended to Congress and the president and the supreme Court. If we are to trust our leaders, We need to know they are working in our interest and not some random companies.
This is perfect policy, the Fed affects macros not individual stocks so it sounds like the government is doing something when it’s ensuring that Fed officials are only investing in indexes / macros which is where Fed policies are likely to affect markets the greatest.
The Fed is setting the example here that congress should follow but won’t cuz it’s already too corrupted by representatives with conflicts of interest.
Have to ask how this wasn't instituted in the first place, excluding the "well it's corruption, obviously" answers.
Every single financial job in the private sector has extreme guidelines around this, the Fed is like a buyside firm with ultimate private information access.
It is instituted. I work at the Fed in a relatively junior role.
I can't buy bank stock, or for any practical purposes any financial firm stock (or bonds). I can't buy funds finance-focused mutual funds or any kind. I can't buy stocks of any firm where I have any sort of insider trading, such as contractors.
Lastly, there's a window around FOMC meetings where anyone with any sort of insider knowledge is prohibited to trade at all.
But last I checked on my Robinhood account, I do own some GitLab, Cloudflare, etc. firms that I think are doing quite well compared to their current market prices. And that's mostly based on what I read (HN, etc).
The question is, should employees be disallowed to own stocks at all? (Right now this rule is aimed at officers, but officers are like 20% of the number of employees of my division, so it's still a lot). I would say doing so makes it quite more difficult for economists to take jobs at the Fed, where the salary is not as competitive as in other places such as the private sector (and already all the friends in my PhD Finance cohort earn more than I do..). To make a parallel, imagine that working at Google prohibits you from owning stocks at any firm that trades/buys/sells/interacts with Google or its competitors.
Can verifiy. 20 yrs ago I worked for an investment/financial mgt company. Brokerage/MF/401k/IRA etc. I had to submit for and get permission to buy or sell any individual equities.
Most financial jobs in the private sector allow the ownership of individual stocks. This is quite a strong ban being implemented, it doesn't suggest there were no guidelines in the first place.
Does anyone think the SEC will take similar actions against elected officials? Given there have been plenty of stories about this happening it seems like it should be up for consideration.
It's literally not their job, because elected officials made it not their job. If you don't like that, it's our job to vote them out.
But that can't happen. Because people are more likely to vote for a knowingly corrupt politician as long as they're in the right party, over another politician in the wrong party.
Probably - in part - because of conditioning by our politicians, scaring us that the other "side" is going to do something real bad if they ever "win". Nevermind the other "side" "wins" every 8 years or so.
I don't say this disparagingly. I think I suffer from it to some extent too. I just don't know what to do about it and it makes me sad.
Even if they could ban them, it probably wouldn't curb their behavior. It's trivial to obscure trades.
A better approach, IMHO, is to make their trades available to the public as quickly as possible, and force brokers to mandate trading grace periods for elected officials. At least then, the public has a chance to get in on the action. So if a corrupt-ass senator on the house foreign intelligence committee buys up some pharma companies after a closed door briefing, r/WSB will have a chance to get in on the action first.
Fed says trading activity by top officials under independent review
Fed leaders have said the trading activities of its top leaders complied with existing, albeit insufficient guidelines. But the Fed’s latest statement reflected a more concerted focus on the trades themselves.
> Basically, do a good job for the economy overall and then your net worth will increase.
The economy's health is not necessarily accurately reflected in asset valuations (which is what index funds track).
When it becomes clear the pie will stop growing for a little while, wealthy politicians have the perverse incentive to enact policies increasing asset prices at the expense of overall productivity (in 2021-2022 this manifested in money supply increase combined with lockdowns to delay inflation until after the transfer of wealth).
First (as usual) it incentivises short term-ism. Some penalty to initiatives where we take a hit now but benefit in 40 years, e.g. climate action.
It incentivises our entire political class to keep broad asset bubbles going and "not stop the party" while they're in control.
It increases incentives to misrepresent or obfuscate the state of the entire economy (money supply, inflation and other macro things that influence the market as a whole).
To be fair all these incentives exist right now, so it might not make things worse.
It would be kinda interesting if each town/county/state/country had an associated index fund (maybe one for Earth as a whole, too) and elected officials were only allowed to invest in one "up" from their elected seat. I mean this would involve a ton of bookkeeping but it would be interesting to see
* how behavior changes when elected officials are required to have their interest in line with their constituents.
Now, if only the same rules could be applied to Congress.
Congress critters giving themselves immunity from insider trading laws was a real sleeve move. I have friends who still believe that we have a fair and democratic government, but I just keep my mouth shut. Let them have their ignorance is bliss.
I would like to see them required to give 24 hours notice of any trades. If a few members of the armed services committee want to sell Boeing stock tomorrow, fine, but the market can decide what that means first.
One would hope so. When I worked for Bank of America, as a lowly computer programmer I was required to make all of my investment information available to the compliance office as well as all of my wife's. In practical terms it meant moving my IRAs from Schwab to Fidelity, but it was still inconvenient (and cost me about $100 in fees for which I wasn't reimbursed). I would expect much stricter controls on people with this level of influence.
Disclosure responsibilities for Federal judges extend to spouses and any family living in the home IIRC, I would imagine this restriction would have similar coverage.
I would expect mutual funds are much more correlated than individual stocks to the effects of monetary policy.
Requiring them to trade slowly so they can't game short-term market effects from their day job makes a lot of sense.
I don't fully understand the ban on individual stocks vs mutual funds though. Is that just for ease of oversight? Is ex. tesla more responsive to monetary policy than mutual funds?
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.
Insider trading is already a crime and with all the ways to work around that law it’s still seen as a risky enterprise, so it seems to work.
But more importantly: lawmakers are judged by voters. If media reports that a lawmaker tried to dodge laws or even ethics frameworks then voters should deliver the punishment even if a court can’t.
Ban insider trading in Congress as well. Double their salaries, ban all speculative activity, and monitor their inflows/outflows and large property purchases so that no shenanigans occur under the table.
It's blindingly obvious corruption when Nancy Pelosi is able to do better in the stock market than Warren Buffett, and all hedge funds save for RenTech: https://twitter.com/nancytracker
It's nuts when congresspeople pretend to "grill" Big Tech and Big Pharma execs while holding multmillion dollar positions in their companies' stocks.
If there is a real "threat to our democracy", this is it. This is the threat. Of course this would deprive congresspeople of billions of dollars in stock gains, so you can be 100% sure no laws abridging any such activity will ever pass, but one can dream.
For the Fed, this doesn't seem enough. Their policy has a predictable effect on the whole market, so I think they should not be trading in the couple of weeks leading up to a Fed announcement.
I have long felt that once you get elected to Congress or higher office that you should be stripped of all of your assets like real estate, stocks, etc. After you are done serving the people you would be given a reasonable salary, a free home, and would live the rest of your life like some sort of monk barred from ever participating in the capitalist system again.
[+] [-] jrochkind1|4 years ago|reply
> The Federal Reserve announced sweeping new rules for its top officials Thursday, banning trading in individual stocks and bonds.
The top officials of the Fed. not congress people.
The comments thread here is making me wonder if all HN comment threads are made up mostly of posters who haven't read beyond the headline.
[+] [-] MatmaRex|4 years ago|reply
For better or worse, the title and the link is just a discussion prompt. The guidelines all but state that you're not expected to read it before commenting:
> https://news.ycombinator.com/newsguidelines.html
> Please don't comment on whether someone read an article. "Did you even read the article? It mentions that" can be shortened to "The article mentions that."
In this case, someone should probably edit the title.
[+] [-] matheusmoreira|4 years ago|reply
[+] [-] silexia|4 years ago|reply
[+] [-] baby|4 years ago|reply
[+] [-] _3u10|4 years ago|reply
In startup parlance the fed is the rising tide.
[+] [-] gigatexal|4 years ago|reply
[+] [-] buu700|4 years ago|reply
[+] [-] dogman144|4 years ago|reply
Every single financial job in the private sector has extreme guidelines around this, the Fed is like a buyside firm with ultimate private information access.
[+] [-] zzleeper|4 years ago|reply
I can't buy bank stock, or for any practical purposes any financial firm stock (or bonds). I can't buy funds finance-focused mutual funds or any kind. I can't buy stocks of any firm where I have any sort of insider trading, such as contractors.
Lastly, there's a window around FOMC meetings where anyone with any sort of insider knowledge is prohibited to trade at all.
But last I checked on my Robinhood account, I do own some GitLab, Cloudflare, etc. firms that I think are doing quite well compared to their current market prices. And that's mostly based on what I read (HN, etc).
The question is, should employees be disallowed to own stocks at all? (Right now this rule is aimed at officers, but officers are like 20% of the number of employees of my division, so it's still a lot). I would say doing so makes it quite more difficult for economists to take jobs at the Fed, where the salary is not as competitive as in other places such as the private sector (and already all the friends in my PhD Finance cohort earn more than I do..). To make a parallel, imagine that working at Google prohibits you from owning stocks at any firm that trades/buys/sells/interacts with Google or its competitors.
[+] [-] slowhand09|4 years ago|reply
[+] [-] bidirectional|4 years ago|reply
[+] [-] brodouevencode|4 years ago|reply
[+] [-] bcrosby95|4 years ago|reply
But that can't happen. Because people are more likely to vote for a knowingly corrupt politician as long as they're in the right party, over another politician in the wrong party.
Probably - in part - because of conditioning by our politicians, scaring us that the other "side" is going to do something real bad if they ever "win". Nevermind the other "side" "wins" every 8 years or so.
I don't say this disparagingly. I think I suffer from it to some extent too. I just don't know what to do about it and it makes me sad.
[+] [-] davidw|4 years ago|reply
One of my Senators is pushing for an end to trading of individual stocks: https://www.npr.org/2021/09/22/1039565467/many-believe-its-t...
[+] [-] dragonwriter|4 years ago|reply
No, because the SEC doesn’t have authority to do that.
Congress did that, once, but then delayed it becoming effective until finally they decided to repeal it.
[+] [-] mywittyname|4 years ago|reply
A better approach, IMHO, is to make their trades available to the public as quickly as possible, and force brokers to mandate trading grace periods for elected officials. At least then, the public has a chance to get in on the action. So if a corrupt-ass senator on the house foreign intelligence committee buys up some pharma companies after a closed door briefing, r/WSB will have a chance to get in on the action first.
[+] [-] flyingfences|4 years ago|reply
[+] [-] adolph|4 years ago|reply
Fed leaders have said the trading activities of its top leaders complied with existing, albeit insufficient guidelines. But the Fed’s latest statement reflected a more concerted focus on the trades themselves.
https://www.washingtonpost.com/us-policy/2021/10/04/fed-ethi...
[+] [-] honksillet|4 years ago|reply
[+] [-] yelnatz|4 years ago|reply
https://fortune.com/2020/03/20/senators-burr-loeffler-sold-s...
[+] [-] 908B64B197|4 years ago|reply
Basically, do a good job for the economy overall and then your net worth will increase.
[+] [-] leppr|4 years ago|reply
The economy's health is not necessarily accurately reflected in asset valuations (which is what index funds track).
When it becomes clear the pie will stop growing for a little while, wealthy politicians have the perverse incentive to enact policies increasing asset prices at the expense of overall productivity (in 2021-2022 this manifested in money supply increase combined with lockdowns to delay inflation until after the transfer of wealth).
[+] [-] xyzzy123|4 years ago|reply
First (as usual) it incentivises short term-ism. Some penalty to initiatives where we take a hit now but benefit in 40 years, e.g. climate action.
It incentivises our entire political class to keep broad asset bubbles going and "not stop the party" while they're in control.
It increases incentives to misrepresent or obfuscate the state of the entire economy (money supply, inflation and other macro things that influence the market as a whole).
To be fair all these incentives exist right now, so it might not make things worse.
[+] [-] bee_rider|4 years ago|reply
* how behavior changes when elected officials are required to have their interest in line with their constituents.
* what mixes people choose.
[+] [-] Moodles|4 years ago|reply
[+] [-] mark_l_watson|4 years ago|reply
Congress critters giving themselves immunity from insider trading laws was a real sleeve move. I have friends who still believe that we have a fair and democratic government, but I just keep my mouth shut. Let them have their ignorance is bliss.
[+] [-] google234123|4 years ago|reply
[+] [-] pmorici|4 years ago|reply
[+] [-] rufus_foreman|4 years ago|reply
[+] [-] jefflombardjr|4 years ago|reply
[+] [-] unbalancedevh|4 years ago|reply
[+] [-] dhosek|4 years ago|reply
[+] [-] B-Con|4 years ago|reply
[+] [-] cwkoss|4 years ago|reply
Requiring them to trade slowly so they can't game short-term market effects from their day job makes a lot of sense.
I don't fully understand the ban on individual stocks vs mutual funds though. Is that just for ease of oversight? Is ex. tesla more responsive to monetary policy than mutual funds?
[+] [-] unknown|4 years ago|reply
[deleted]
[+] [-] trident5000|4 years ago|reply
Also the last time there was any rule about congress insider trading they just waited until nobody was looking anymore and revoked it.
[+] [-] lastofthemojito|4 years ago|reply
[+] [-] alkonaut|4 years ago|reply
But more importantly: lawmakers are judged by voters. If media reports that a lawmaker tried to dodge laws or even ethics frameworks then voters should deliver the punishment even if a court can’t.
[+] [-] m0zg|4 years ago|reply
It's blindingly obvious corruption when Nancy Pelosi is able to do better in the stock market than Warren Buffett, and all hedge funds save for RenTech: https://twitter.com/nancytracker
It's nuts when congresspeople pretend to "grill" Big Tech and Big Pharma execs while holding multmillion dollar positions in their companies' stocks.
If there is a real "threat to our democracy", this is it. This is the threat. Of course this would deprive congresspeople of billions of dollars in stock gains, so you can be 100% sure no laws abridging any such activity will ever pass, but one can dream.
[+] [-] robbmorganf|4 years ago|reply
[+] [-] whimsicalism|4 years ago|reply
If you become known for being uh.. "corrupt", the market will price out your gains.
[+] [-] squallgmn|4 years ago|reply
[+] [-] efitz|4 years ago|reply
[+] [-] enterthematrix|4 years ago|reply
[+] [-] bufferoverflow|4 years ago|reply
[+] [-] onenightnine|4 years ago|reply
[+] [-] robotburrito|4 years ago|reply