Fed vice chairman latest civil servant to resign in trade scandal | Economic news
By CHRISTOPHER RUGABER, economic editor of the AP
WASHINGTON (AP) – Federal Reserve Vice Chairman Richard Clarida on Monday said he would step down on Friday, the third Fed official to step down amid a trade scandal at the central bank.
The announcement follows new revelations regarding Clarida’s trading in an equity fund in February 2020, when the coronavirus threatened to disrupt the global economy and the Fed was discussing extraordinary measures to counter its impact.
The New York Times reported last week that Clarida changed its financial information last month to show that it sold and then repurchased shares of the equity fund within days that month. Previously, Clarida had just reported on the purchases, which took place the day before President Jerome Powell said the Fed was ready to support markets and the economy.
The Fed had called the purchase a simple portfolio rebalancing – an explanation that was contradicted by the revelation of the initial sale.
Clarida, who was part of an inner circle of Fed officials close to Powell and known as the “troika”, was due to complete her term at the end of this month. Instead, he will resign about two weeks earlier. In doing so, he will miss what would have been his last meeting, scheduled for January 25 and 26.
Clarida took office in September 2018 after teaching at Columbia University and working 12 years for investment fund manager PIMCO. He received deferred bonuses and shares from his work at PIMCO. And when he joined the Fed in 2018, Clarida’s financial reports, which show assets in a range of stocks, estimated his wealth to be between $ 9 million and $ 39 million.
Last year, the chairmen of two regional Fed banks – Robert Kaplan of the Dallas Fed and Eric Rosengren of the Boston Fed – also resigned after their questionable transactions were exposed.
Kaplan had traded for at least $ 1 million worth of shares in 22 deals in 2020. Rosengren invested in an investment fund that held mortgage-backed securities, similar to what the Fed bought to try to maintain. long-term rates. All of the trades were made as the Fed took significant steps to support financial markets, potentially benefiting Kaplan, Rosengren and Clarida.
Following the announcement of the resignations, Powell unveiled new ethics rules for trading by members of the Fed’s board of directors and other senior officials. The rules prohibit Fed officials from holding individual stocks or bonds and require 45 days’ notice of any trade.
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