Federal Reserve Board Chairman Jerome Powell speaks to reporters after the Federal Reserve raised its target interest rate by three-quarters of a percentage point to stem a disruptive surge in inflation, during a a press conference following a two-day meeting of the Federal Open Market Committee (FOMC) in Washington, United States, June 15, 2022.
Elizabeth Frantz | Reuters
The controversial business activities of Federal Reserve Chairman Jerome Powell and former Vice Chairman Richard Clarida broke no rules or laws, the central bank’s Office of Inspector General said Thursday.
The report covered a period from 2019-21 when the two senior officials traded stocks and funds as the central bank used monetary policy to influence financial markets.
The period included the weeks before the declaration of the Covid-19 pandemic, as the Fed cut interest rates and instituted other market supports, measures that would intensify after the declaration of the pandemic.
“We did not find evidence to support allegations that you or former Vice President Clarida violated any laws, rules, regulations or policies related to business activities investigated by our office,” said Inspector General Mark Bialek to Powell in a letter. “Based on our findings, we are closing our investigation into the business activities of former Vice President Clarida and yourself.”
While the report cleared Powell and Clarida, Bialek said assessments of other senior Fed officials’ transactions were ongoing.
Former regional presidents Robert Kaplan of Dallas and Eric Rosengren of Boston retired following disclosure of their investment portfolio activities. Clarida is also gone, resigning in January just before taking up a teaching position at Columbia University.
The OIG found “that I exceeded financial ethics and disclosure requirements during my tenure as vice president,” Clarida said in a statement.
“I have always been committed to conducting myself with integrity and respect for public service obligations, and this report reaffirms that lifelong commitment to exceeding ethical standards,” he added.
Earlier this year, the Fed passed a tough set of new rules that prohibit officials from trading individual stocks and bonds as well as cryptocurrencies.