By Katy Burne

The Federal Reserve said it has expanded its curbs on bank supervisors departing for private practice, moving to address criticisms of an alleged "revolving door" between the regulator and Wall Street.

The central bank's new measures, which apply solely to supervision employees, are designed to tighten the restraints it poses on officials leaving for financial institutions and to "promote consistency in post-employment ethics rules" across the system, the Fed said.

The Fed already had a one-year cooling-off period for senior officials leaving the Fed and accepting paid work from a financial institution for which they had primary responsibility in their last 12 months at the central bank. That rule applied primarily to officials who were "central points of contact" as key supervisors of firms with more than $10 billion in assets.

The new measures expand the policy for senior examiners to a wider swath of individuals. It now covers deputies of those central points of contact for banks, senior supervisory officers, deputy senior supervisors, enterprise-risk officers and team leaders in the financial supervision group. The Fed said the change would more than double the number of employees captured under the policy to 250 from about 100 across the system.

The revisions also impose a new restriction, whereby Fed employees are prohibited from discussing official business with former Fed officers for one year. Social meetings are allowed between current employees and former officers, so long as Fed business isn't discussed.

Former Fed officials are prohibited from representing financial institutions andother third parties before Fed employees for one year after leaving. It remains illegal to share confidential information relating to the Fed's supervisory activities outside of the central bank.

Those restrictions for former officers become effective Dec. 5. For senior examiners, the revised policies become effective Jan. 2.

The Wall Street Journal reported in late 2015 that the Fed was weighing an expanded set of post-employment restrictions, after taking heat from Congress when a former New York Fed official left for Goldman Sachs Group Inc. and obtained Fed secrets.

A New York state banking regulator fined Goldman $50 million for failing to properly supervise the former New York Fed employee, Rohit Bansal, who got the confidential materials from a former colleague at the Fed.

In August, Goldman paid a further $36.3 million to settle Fed allegations that it misused confidential regulation information leaked from the central bank. The central bank also permanently barred Mr. Bansal from the banking industry.

Mr. Bansal had joined Goldman in the summer of 2014, only a few months after having acted as a supervisor for the Fed. Goldman fired him when it discovered the matter internally and notified the Fed.

In a Nov. 2014 congressional hearing, Sen. Jeff Merkley (D., Ore.) called attention to what he perceived as insufficient distance between departing Fed officials and private practice.

"Is there a revolving-door policy that bans people who have worked as regulators from then going back to work on Wall Street?" he asked New York Fed President William Dudley at the hearing. Mr. Dudley responded that there was a one-year cooling-off period for senior examiners. That was before the Fed expanded the category to include more rankings.

Sen. Merkley asked if those restrictions applied to more junior employees and Mr. Dudley acknowledged that this was a "reasonable question."

Write to Katy Burne at katy.burne@wsj.com

(END) Dow Jones Newswires

November 18, 2016 12:57 ET (17:57 GMT)

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