Ooops, They Did it Again.
Late last Friday President of the Federal Reserve Bank of Atlanta, Raphael Bostic revealed that he failed to disclose a number of trades in his personal accounts before, during and after the Fed launched Operation Buy Everything March 23rd, 2020. From Bloomberg News,
Atlanta Fed President Raphael Bostic said Friday that his asset managers made trades during restricted periods and transactions had been inadvertently omitted from his financial disclosures. The regional bank also posted the corrected disclosures -- going back to 2017, the year he became chief.
Inadvertently omitted? Hmm
“I take very seriously my responsibility to be transparent about my financial transactions and to avoid any actual or perceived conflicts of interest,” Bostic, 56, said in the statement.
Well, maybe not transparent enough?
The Atlanta Fed’s board of directors expressed its support for Bostic. “My board colleagues and I have confidence in President Bostic’s explanation that he did not seek to profit from any FOMC-related knowledge,” board chair Elizabeth Smith said.
Doesn’t seem like they exactly raked him over the coals, does it?
Bostic’s excuse for these trades is that they were done by an outside manager, and he (Bostic) had no discretion. The trades were done without his knowledge. Really?When the world was melting down in late February - March 2020 you don’t think he might have checked in once or twice to see if his net worth was getting halved or worse? I am going to challenge the whole, unaware argument, but even if that is true, how were these trades left off his disclosure form?
This is really too bad because I liked Bostic. Then again, I also liked former Dallas Fed President Robert Kaplan and he broke my heart by trading his ass off during the pandemic. I wrote about that a few weeks ago
I checked out Bostic’s 2020 Disclosure Form
and found some alarming stuff. I do, however, have to commend Bostic on at least putting trade dates when his manager bought and sold a fund. Kaplan just said in the trade date column “Multiple”.
Actually, now that I think about it, I wonder if anyone actually reconciles the disclosure forms to the trade tickets? I am going to guess….no.
Anyway, what I notice is starting February 18th Bostic’s manager starts de-risking, selling small cap, mid cap, emerging market and other equity mutual funds, really picking up the pace February 27th as it started dawning on us that Covid was a comin’.
As Covid hit our shores and world-wide lockdown started in March, markets started to completely lockdown as well. On March 16th the Fed cut their policy rate to zero again and restarted Quantitative Easing. As opposed to the Great Financial Crisis, this time, those drastic measures weren’t enough, and stocks continued to crash, and all markets froze up. On March 23rd, the Fed launched Quantitative Easing to Infinity pledging to buy unlimited amounts of Treasury notes and MBS along with a whole host of other risk products, “Whatever it Takes”.
Interestingly, two trading prior to Operation Buy Everything, March 19th, Bostic’s manager started re-risking, buying equity growth, mid cap equity, international equity, etc… AND selling low-risk short term bond funds and Treasury Inflation Protected (TIPs). On March 24th, the manager continued selling the low-risk funds and buying small, mid and large cap funds as well as international and emerging market equity funds. March 24, 2020, of course was the day that stocks began to blast off, ending up from the March 23, 2020 low, 67% by year-end.
Nothing to see here, move along. Yeesh!
If he can’t keep track of his own finances, I’m not sure he’s the right person to be making financial decisions on our country’s finances
"Bostic’s excuse for these trades is that they were done by an outside manager, and he (Bostic) had no discretion."
Who's the "outside" manager?