Politics

Fed No. 2 resigns amid trade scandal

But in a correction to its 2020 financial disclosure, Clarida said he sold between $ 1 million and $ 5 million in the same equity fund three days before buying it, indicating that he was actively trading. In the December 16 memo submitted to the Government Ethics Office, he called the exclusion of the information an “unintentional error.”

The news created new questions about the ethics rules of the Fed just before Powell prepared to have his confirmation hearing Tuesday before the Senate Banking Committee. Fed board member Lael Brainard, who has been chosen to replace Clarida as vice chairman, will be heard on Thursday.

As Powell’s No.2, Clarida has played a major role in central bank interest rate decisions over the past few years, including an overhaul of its policy framework designed to place more emphasis on broad and inclusive employment.

“The Covid pandemic has taken a tragic human toll measured in lives lost and suffering inflicted, and in 2020 triggered a catastrophic collapse of economic activity and a spike in unemployment,” he said in a letter from resignation to President Joe Biden. “I am proud to have served with my colleagues at the Federal Reserve as we put in place, in a matter of weeks, historic policy measures which, in conjunction with fiscal policy, have moved the economy away from depression and supported a solid recovery in economic conditions. activity and employment since.

Clarida’s deals came under scrutiny after Dallas Fed Chairman Robert Kaplan and Boston Fed Chairman Eric Rosengren were criticized for revelations they bought and sold stocks and real estate assets in 2020 as the central bank embarked on a sweeping financial market bailout. . The two men resigned a few weeks after the storm.

In late October, Powell announced a major overhaul of conflict of interest rules, saying policymakers and senior Fed officials will be banned from active trading and will only be able to purchase diversified investment vehicles like mutual funds. shift.

Under the new policy, central bank policymakers and senior staff will be required to give 45 days’ notice and obtain prior approval from internal ethics staff for all purchases and sales. They will also need to hold all investments for at least one year.


Politico

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