Federal Reserve Chair Jerome Powell has ordered a sweeping review of the ethics rules governing financial holdings and dealings by senior officials at the U.S. central bank, a Fed spokesperson said on Thursday.

Powell ordered the review late last week, the spokesperson said, a development that comes on the heels of recent reports that two of the Fed system's 12 regional reserve bank presidents had been active investors. Those revelations, originally reported by the WSJ, prompted senior U.S. lawmakers - including Senator Elizabeth Warren of Massachusetts - to demand more stringent restrictions on such activities.

"Because the trust of the American people is essential for the Federal Reserve to effectively carry out our important mission, Chair Powell late last week directed Board staff to take a fresh and comprehensive look at the ethics rules around permissible financial holdings and activities by senior Fed officials," the spokesperson said.

The rules that guide personal financial practices for Fed officials are the same as those for other government agencies, the spokesperson said. Moreover, the Fed has supplemental rules that are stricter than those for Congress and other agencies that are specific to the work conducted by the Fed.

"This review will assist in identifying ways to further tighten those rules and standards. The Board will make changes, as appropriate, and any changes will be added to the Reserve Bank Code of Conduct," the spokesperson said.

Sen. Warren wrote individual letters for each of the 12 Federal Reserve banks, the WSJ reports. In the one that she sent to the head of the Dallas branch, she writes: "The controversy over asset trading by high-level Fed personnel highlights why it is necessary to ban ownership and trading of individual stocks by senior officials who are supposed to serve the public interest. I am therefore asking that, within 60 days, you impose a ban on the ownership and trading of individual stocks by senior officals at the Federal Reserve Bank of Dallas."

The WSJ reported last week that Dallas Federal Reserve Bank President Robert Kaplan and Boston Fed President Eric Rosengren actively traded stocks and other instruments throughout 2020. The journal found SEC filings showing Kaplan made multiple stock trades, each for $1 million or more.

Kaplan a Goldman Sachs Alumnus

Before becoming president of the Dallas Federal Reserve Bank, Kaplan was a 20-year veteran at Goldman Sachs. He left the investment bank in 2006. SEC filings show that he then began personally trading Apple, Alibaba Group Holding Ltd., Amazon.com Inc., General Electric Co. and Chevron Corp. stocks, among others. Other investments Kaplan made were in instruments tied to interest rates and stock futures, the values of which are heavily dependent on monetary policies.

Rosengren made similar trades, including those in real-estate-related securities. The central banker has often spoken against risks in the real estate market, according to the WSJ.

Late last week, Kaplan and Rosengren said they would sell their stocks and put the money into more diversified investment sby the end of September.