Fed Watchdog Clears Powell and Clarida in Trading Scandal Probe
2022.07.14 22:39
© Bloomberg. Richard Clarida, vice chairman of Federal Reserve System, speaks during the National Association of Business Economics (NABE) economic policy conference in Washington, D.C., U.S., on Tuesday, Feb. 25, 2020. This year’s annual conference theme is
(Bloomberg) — The Federal Reserve’s Inspector General said Chair Jerome Powell and former Vice Chair Richard Clarida’s trading activity had not broken any laws or rules, but the probe into the former heads of the Dallas and Boston regional Fed banks was ongoing.
“We did not find evidence to substantiate the allegations that former Vice Chair Clarida or you violated laws, rules, regulations, or policies related to trading activities as investigated by our office,” Inspector General Mark Bialek said in a letter to Powell dated June 11 and published Thursday.
The Fed unveiled tough new rules restricting the trading activities of senior officials following an embarrassing ethics scandal last year prompted demands from US lawmakers for change.
Then-Boston Fed President Eric Rosengren and his Dallas counterpart Robert Kaplan stepped down last year after questions were raised about their unusual trading activity during 2020 as the Fed fought to shield the economy from the pandemic. Rosengren cited ill health in announcing his early retirement.
Disclosures by Clarida showed he sold at least $1 million of shares in a U.S. stock fund in February 2020 before buying a similar amount of the same fund a few days later, on the eve of a major Fed announcement that signaled its readiness to buffer the economy from the coronavirus. Clarida stepped down on Jan. 14 ahead of the expiration of his term as a governor on Jan. 31.
The IG said a financial advisor to a Powell family trust made five trades during a Fed blackout period.
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