“It seems like a big step in the right direction,” said Sarah Binder, a professor of political science at George Washington University and the co-author of a book on the politics of the Fed. “The devil’s in the details of exactly how these get written and defined.”
The new rules still need to be followed up by the planned external investigation, said Kaleb Nygaard, a senior research associate at the Yale Program on Financial Stability who studies the central bank. And it remains to be seen whether they will resolve the public perception that Fed officials might try to profit from their positions.
“This is in line with what people would think they would be — what they should have been — all along,” he said. “Most of the problem was with perception. It’s really inappropriate and really bad. And it’s hard to know if perception-wise, this will be enough.”
The speed of the changes was surprising for the central bank, which is often a slow-moving and contemplative institution, said David Beckworth, a senior research fellow at the Mercatus Center at George Mason University.
“Yes, they were forced into this — being pushed into the spotlight — but I think the scope is also important,” he said, saying that the new rules check necessary boxes. “It’s unfortunate that this is how this came about: They got their hand caught in the cookie jar. It does seem, at first glance, to cross the t’s and dot the i’s.”
Both the ferocity of the backlash to the Fed’s ethics dilemma and the speed of the review might have owed in part to the sensitive timing. Mr. Powell’s term as chair of the Fed ends early next year, and some progressives who do not want to see him reappointed have seized on the trading issues as they argue that the White House should choose someone new.
Better Markets, a financial watchdog group that has ranked among Mr. Powell’s most strident critics, said in a release following the announcement that the rules do not go far enough.