Fed ethics investigation clears Powell, Clarida
“[W]e 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,” the OIG wrote in a letter to Powell.
In the report, the Fed’s OIG outlined how a financial adviser working on behalf of a Powell family trust executed five trades in December 2019 during what is known as the “blackout period,” when Fed officials are barred from a range of financial activities. The report made clear the trades were precipitated after Powell’s wife asked to make funds available for the purpose of charitable donations at the end of the year.
The financial adviser later acknowledged that the execution and timing of the trades were an “oversight,” and as a result, the OIG did not rule that Powell or his family members violated laws or regulations.
The report comes nine months after the Fed’s inspector general began investigating whether trading activity by the central bank’s top officials complied with ethics rules and the law. The investigation is still working on its review of the activities of two other former Fed officials: Eric Rosengren, who led the Boston Fed, and Robert Kaplan, who led the Dallas Fed. Both announced their resignations in September.
The ethics scandal and its fallout are playing out as the Fed battles other major problems in the economy. On Wednesday, new inflation data showed prices soared by 9.1 percent in June compared with the year before, extending another peak and giving the Fed no comfort that its policies are bringing inflation down. As a result, the Fed’s paths to avoiding a recession are getting narrower as the American public sours on the economy and faces high prices for groceries, gas, rent and everything in between.
Scrutiny over Clarida’s trading activity began in October after Bloomberg News reported that he bought shares in February 2020 of an investment fund that held stocks. That move occurred just before the Fed announced it was prepared to help the economy as the pandemic began to take hold, restoring confidence to the markets.
Attention on Clarida’s trades intensified months later after the New York Times reported that he failed to disclose the full extent of his trading. Months after his initial disclosures, Clarida corrected his public records, showing that he moved money out of a stock fund as the pandemic…
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