The answers is because software developers have leverage to improve their working conditions. The answer is to reduce exploitation in other industries not increase it for FAANG company staff...
Remember everyone at the Fed who refused to raise rates last year and hand waved inflation as transitory still has their job. They only started accepting inflation as real after introducing stock trading transparency rules which forced many to start unwinding their personal portfolios [1].
First it was inflation is transitory, then inflation is good for economy, then big interest hikes are coming. So far we see tiny .75% hikes. Fed refuses to increase interest rate so it at least matches inflation.
Suppose I were a Fed bank president who wanted to profit from advance knowledge of changes to rates.
When I know rates are going to decrease, I buy a growth ETF, like VIGRX, or a tech index like QQQ. Or I buy a bigger house, safe in the knowledge that prices will go up and I can refinance soon at lower rates. And if options are allowed and I want more gains, I buy calls on ETFs like the ones I mentioned.
When I know rates are going to increase, I instead simply get out and hold cash. Or if options are allowed, I buy puts on QQQ, or at least sell calls.
In all of these hypothetical transactions, I have benefited from my advance knowledge of rate changes, without picking a single individual stock.
I can even make an argument that these diversified trades are more reflective of rate changes, since those changes have broad impact across the economy, whereas specific stocks are confounded by all sorts of idiosyncratic things. Using these ETFs, I average out more of the random variables that aren't "interest rates".
So I don't see how this new rule, which bans stock picking by people at the Fed, matters a lot. These people don't regulate specific industries; they set rates. About the only exception I can think of is bank stocks: Maybe the Fed's interactions with specific banks are significant. But apart from that -- this seems good for appearances, but does it actually accomplish much?
For congresspeople on the other hand, or for people in regulatory agencies, I get it. You don't want a regulator siding with one company over another, or, indeed, from being overinvested in whatever sector they're regulating ("Let pharma get profits at all costs! What do I care about opioids?").
But for people at the Fed? It's not a crazy rule, but I also don't think it does much.
I generally think Rocket Lab will be a successful SPAC story (eventually). They are so far ahead of the remaining small sat launch market that they while rise to meet SpaceX and Blue Origin in the reusable launcher market.
The top 10% of individuals own a record 89% percent of all the stocks [1]. Using never before seen measures to support the US bond market and at one stage buy individual corporate bonds has created a market in which participants believe they will always be back stopped by the Fed. Hell they are still doing 60 billion of monthly bond purchases (extreme monetary policy) [2] when inflation is printing multi decade highs. I have seen it quoted that in order to repair the Fed balance sheet by "running off" their purchases it will take them close to 30 years of continued "tightening". This is the new normal for centrally planned economic policy in the US, socialising losses to the government balance sheet.
[1] https://www.cnbc.com/2021/10/18/the-wealthiest-10percent-of-...
[2] https://www.cnbc.com/2021/12/15/fed-will-aggressively-dial-b...
