Stock Markets
Fed has yet to face final reckoning two years after trading scandal
© Reuters. FILE PHOTO: The U.S. Federal Reserve building is pictured in Washington, March 18, 2008. REUTERS/Jason Reed/File Photo
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By Michael S. Derby
(Reuters) – Two years after the presidents of the Dallas and Boston Federal Reserve banks left their jobs amid revelations they had traded on financial markets while helping to set monetary policy, an internal watchdog has yet to finish a probe into a scandal that has clouded the U.S. central bank’s reputation.
That’s left some lawmakers in the U.S. Congress, as well as outside experts, incredulous over the state of an inquiry they argue should have been wrapped up long ago. But there has been progress: While several legislative efforts to overhaul central bank ethics and increase transparency have made little headway, the Fed sharply clamped down on how and when its officials, top staff and family members can invest.
On Oct. 4, 2021, Fed Chair Jerome Powell asked the central bank’s Inspector General (IG) to look into the controversy that erupted after it was disclosed that Boston Fed President Eric Rosengren had traded real-estate securities and Dallas Fed President Robert Kaplan had traded millions of dollars of individual stocks in 2020, even as the Fed undertook a rescue of the U.S. economy and financial markets with massive purchases of Treasuries and housing-backed bonds.
That probe later expanded as other concerns about officials’ financial activities emerged, but exactly two years later, IG Mark Bialek has not yet submitted a final report.
“The Fed’s watchdog has failed” at every stage of its investigation so far, Democratic Senator Elizabeth Warren said in an interview. Republican Senator Rick Scott said the lack of resolution “is unfortunately another example of how the Fed has not, and will not, hold anyone accountable for their actions.”
Peter Conti-Brown, a professor at the Wharton School of the University of Pennsylvania, said “the IG has just flubbed this, and that invites all kinds of theorizing, most of which will not be drawn in the Fed’s favor.” He added that “there’s a good reason why we have not gotten a more thorough report about the Reserve Bank presidents’ activities around these trades, or there isn’t. If there’s a good reason, we should know what it is.”
Bialek’s office declined to comment about the state of the investigation.
UP IN THE AIR
The IG cleared Powell just over a year ago of what the central bank chief had said were accidental trades that happened too close to monetary policy meetings. It also cleared Richard Clarida, the Fed’s former vice chair, over how he reported his own trades.
But at the regional level, the IG has yet to weigh in on the trading activities of Rosengren, Kaplan and current Atlanta Fed President Raphael Bostic. Rosengren left the Boston Fed in late September of 2021 and Kaplan followed about a week later.
Both Rosengren and Kaplan have said they followed the Fed rules that governed trading at the time, and their disclosures were approved by Fed lawyers. Neither responded to questions from Reuters about their interactions with the IG probe.
Bostic acknowledged last year that he had inadvertently made financial trades during forbidden periods and noted more such issues in June of 2023.
The Atlanta Fed said the IG “has been in contact with President Bostic since the investigation was initiated, but since it is ongoing, we don’t have any additional comment.”
The most concrete response to the controversy to date has come from the Fed itself. It tightened rules in early 2022 around officials’ investing, sharply limited what financial assets policymakers, top staff and their families could own and clamped down on when they could make transactions. The Fed also said earlier this year that it would implement recommendations from the IG to ensure compliance with the new system.
Conti-Brown praised the central bank’s new ethics regime as likely the best in government, which he said casts the IG’s work in an even worse light. “The Fed has it within itself to be serious about these issues. And I don’t know why the IG is not handling this in a more serious way.”
INDEPENDENCE
Warren and Scott see Bialek, who has been in his job since 2011, as a compromised watchdog because the IG is appointed by the Fed chief, a built-in conflict of interest in their view.
They have proposed legislation that would make the Fed IG position a presidential appointment requiring confirmation by the Senate, something Bialek has publicly opposed.
During a hearing in the Senate in May, Bialek said the Fed had never interfered in his work. He also pushed back on legislators’ assertions that his investigation of Powell and Clarida had been superficial.
He noted that the ongoing probe into the trading activities of Rosengren and Kaplan limited what he could say about his methods, promising that a fuller accounting of how his office has investigated the matter would be forthcoming once the process was complete.
Warren said she’s still holding out hope the IG overhaul bill she proposed with Scott will move forward. Since its introduction last spring, however, it has attracted only half a dozen other co-sponsors and has not been acted upon by the Senate Banking Committee to which it was assigned and where Warren is a member.
“There’s been a long tradition in the Senate of hands off on the Fed. That’s how a culture of corruption first takes root and starts to grow,” Warren said. “Now that we’ve seen that certain lapses have made it into the public view, we’ll make significant changes so that those kinds of mistakes never happen again.”
Sterling Construction Company, Inc. (NASDAQ:) has reached an impressive milestone, with its stock price soaring to an all-time high of $137.93. This peak represents a significant achievement for the company, reflecting a robust performance and investor confidence. Over the past year, Sterling Construction has witnessed a remarkable 84.48% increase in its stock value, underscoring the company’s strong market presence and the positive reception of its strategic initiatives. Investors and market analysts alike are closely monitoring STRL’s progress, as it continues to build on its momentum in the construction sector.
In other recent news, Sterling Infrastructure, Inc. announced two key changes in its leadership. The company revealed the upcoming retirement of board member Charles R. Patton, effective from September 1, 2024. Patton, who has been a part of Sterling’s Board since 2013, will step down after over a decade of service, during which he contributed to the Corporate Governance & Nominating Committee and the Compensation Committee.
In parallel, Sterling Infrastructure named Dan Govin as its new Chief Operating Officer. Govin, who brings over three decades of experience in the energy infrastructure industry, is set to lead the company’s strategic and operational initiatives. His past roles include Regional President at Quanta Services (NYSE:) and Senior Vice President of Operations.
In related developments, Sterling Real Estate Trust, a North Dakota-based real estate investment trust, recently held its annual shareholders’ meeting. During the meeting, eight trustees were elected, including Gregory P. Hammes, Timothy L. Haugen, and Michelle L. Korsmo, among others. Additionally, the appointment of RSM US, LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2024, was ratified by the shareholders. These are among the latest developments at Sterling Infrastructure, Inc. and Sterling Real Estate Trust.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
CRH (NYSE:) PLC, a global leader in building materials, has reached an all-time high, with its stock price soaring to $91.22. This significant milestone underscores the company’s robust performance and investor confidence in its growth trajectory. Over the past year, CRH has seen an impressive 66.73% increase in its stock value, reflecting strong market demand and the successful execution of its strategic initiatives. The company’s ability to achieve this record price level amidst a dynamic economic environment speaks volumes about its resilience and the positive outlook shared by its stakeholders.
In other recent news, CRH Plc has seen a series of positive developments. Stifel, a financial services firm, has increased its EBITDA projections for the company by 4% for the years 2024 and 2025, following a positive outlook on CRH’s earnings. This includes the expected contributions from the newly acquired Adbri, which is predicted to add an additional 1% and 2% to the EBITDA in 2024 and 2025, respectively.
In addition, Deutsche Bank has raised its price target for CRH, maintaining a Buy rating on the stock, following the company’s acquisition of a majority stake in Adbri. This move is anticipated to enhance CRH’s materials solutions offerings in Europe.
Furthermore, CRH has appointed Lauren Schulz as its new Chief Communications Officer, a move expected to enhance the company’s global communications strategy.
Additionally, CRH has filed a notification regarding transactions by persons discharging managerial responsibilities, providing transparency into the dealings of the company’s management.
Lastly, CRH has reported strong growth in adjusted EBITDA and margin for the second quarter of 2024, and has raised its full-year adjusted EBITDA guidance to a range of $6.82 billion to $7.02 billion. These recent developments demonstrate the company’s resilience and strategic approach in a competitive market.
InvestingPro Insights
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For those monitoring CRH’s trajectory, the stock is trading near its 52-week high, at 99.14% of its peak, with a previous close at $89.27. The company’s next earnings date is set for November 7, 2024, which will provide further clarity on its performance and outlook. With a fair value estimate of $101 by analysts and an InvestingPro fair value of $74.35, investors are presented with a nuanced picture of CRH’s valuation. As the market anticipates CRH’s next financial disclosures, the InvestingPro platform remains a valuable resource for real-time data and expert analysis.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
In a remarkable display of market confidence, Nelnet Inc (NYSE:) stock has achieved an all-time high, reaching a price level of $115.64. This milestone underscores a period of significant growth for the company, which has seen its stock value surge by 27.28% over the past year. Investors have rallied behind Nelnet’s strong performance, propelling the stock to new heights and reflecting optimism in the company’s future prospects. The all-time high represents not just a peak for the year but an unprecedented value in the company’s trading history, marking a momentous occasion for both Nelnet and its shareholders.
In other recent news, Nelnet Inc. has been under the spotlight following strong Q2 earnings and subsequent adjustments by TD Cowen. The firm increased Nelnet’s price target to $98.00, up from $96.00, while maintaining a Hold rating on the stock. This follows Nelnet’s Q2 2024 earnings report, which highlighted an EPS of $1.44, surpassing TD Cowen’s estimate of $1.33. The improved earnings were largely due to reduced operating expenses and a lower provision for losses. However, these gains were slightly offset by a decrease in fee income and a lower net interest income.
In recent developments, Nelnet disclosed its quarterly financial results to the Federal Deposit Insurance Corporation (FDIC). The report provides a snapshot of the financial health of Nelnet Bank, its wholly-owned subsidiary, and includes critical data such as assets, liabilities, and income. This commitment to transparency and regulatory compliance allows investors to gauge Nelnet’s financial stability and growth prospects.
Furthermore, Nelnet’s bank subsidiary, Nelnet Bank, also disclosed its quarterly financials. The report, known as the Call Report, is a significant indicator of the subsidiary’s contribution to Nelnet’s overall financial status. This routine disclosure aligns with the requirements of the Securities Exchange Act of 1934, providing a clear view of Nelnet Bank’s financial standing as of the last quarter.
InvestingPro Insights
In light of Nelnet Inc’s (NNI) recent achievement of an all-time high stock price, several InvestingPro Tips and real-time data points provide further context to the company’s financial health and market performance. Notably, Nelnet has demonstrated a robust track record by raising its dividend for 9 consecutive years and maintaining dividend payments for 18 consecutive years, which signals a strong commitment to shareholder returns. Additionally, analysts remain optimistic about the company’s profitability, expecting net income to grow this year.
From a data standpoint, Nelnet’s current market capitalization stands at $4.15 billion with a price-to-earnings (P/E) ratio of 26.88, which adjusts to a lower ratio of 22.02 when considering the last twelve months as of Q2 2024, reflecting a more favorable valuation for investors. The company’s revenue growth has been modest at 0.7% over the last twelve months, yet it experienced a more significant quarterly surge of 12.82% as of Q2 2024. Importantly, Nelnet’s stock is trading near its 52-week high, at 99.06% of this peak, and has seen a large price uptick of 31% over the last six months. These figures underscore the company’s strong market presence and potential for continued growth.
For those interested in deeper analysis, there are additional InvestingPro Tips available at https://www.investing.com/pro/NNI, which can provide investors with more nuanced insights into Nelnet’s performance and future outlook.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.
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