St. Louis Fed President Musalem's Real Estate Transactions Under Scrutiny
A new set of financial disclosures for Federal Reserve regional bank heads, released on Friday, show that St. Louis Fed President Alberto Musalem and his spouse sold and purchased several residential real estate holdings last year. The documents detail the couple's extensive real estate activities, which have sparked renewed scrutiny over the potential influence of Fed policies on the market.
The documents reveal that the couple sold seven properties in Rockville, Maryland, between April and November 2024. These properties were valued between $250,000 and $1 million, with one property valued between $250,000 and $500,000. Additionally, they purchased nine residential real estate properties in Baltimore between June and November. The properties purchased were valued at different ranges, with four properties valued up to $50,000, three worth between $100,000 and $250,000, one worth between $50,000 and $100,000, and another valued at between $1 million and $5 million.
When asked for comment on these transactions, a spokesperson for the St. Louis Fed stated, “President Musalem’s spouse operates real estate companies and regularly conducts real estate transactions.” The spokesperson also noted that Musalem is a joint owner of these properties.
None of the transactions violate the rules governing the personal investment activity of Fed policymakers. These rules were tightened in 2021 following several controversial transactions by officials. The changes restricted active trading, prohibited the purchase of individual securities, and increased disclosure requirements for policymakers and senior staff members. The guidelines also emphasize that officials should avoid the appearance of acting on insider information.
The rules do not prohibit direct investments in real estate, which is one of the most interest-rate sensitive sectors in the US economy. The transactions reported by Musalem began the same month he joined the central bank and five months before the Fed began easing policy. In the latter part of 2024, officials lowered the benchmark federal funds rate by one percentage point, from September to December.
Renewed scrutiny over Fed officials’ financial transactions has been ongoing since the pandemic. In 2020, it was revealed that two policymakers had engaged in multiple trades as the US central bank was taking extreme steps to shore up financial markets and the economy. Real estate is particularly sensitive to interest rate changes, and former Boston Fed President Eric Rosengren faced criticism after disclosures revealed he made multiple sales and purchases of real estate investment securities in 2020. Rosengren stepped down in 2021, citing health issues.
Kansas City Fed President Jeff Schmid also reported Friday that he sold a residential investment in Burleson, Texas, in November, valued between $250,000 and $500,000. A spokesman for Schmid confirmed that he “has fully complied with all financial holding and disclosure requirements established for Federal Reserve bank presidents.”
The transparency and compliance with regulations are crucial for maintaining public trust in the Federal Reserve. As the central bank continues to navigate the complexities of economic policy, the scrutiny of personal financial activities will likely remain a contentious issue.
