Fed watchdog: Top officials did not break the law when investigating trade scandal, #Fed #watchdog #Top #officials #break #law #trading #scandal #son OLASMEDIA TV NEWSThis is what we have for you today:
The Federal Reserve watchdog on Thursday acquitted two top officials of any wrongdoing in a trade scandal in the financial markets that shocked the central bank last year.
Why it matters: It was the biggest ethical scandal in Fed history, sparking the ire of lawmakers and raising questions about how key economic policymakers can benefit from the policies they have enacted.
What’s new: Trading activities of Fed Chair Jerome Powell and then Vice-Chairman Richard Clarida, the second most powerful position at the central bank, “do not violate any laws, rules, regulations or policies,” according to a statement. memo by the Office of the Inspector General who conducted the investigation.
- Investigations of then Federal Reserve Bank presidents Eric Rosengren (Boston) and Robert Kaplan (Dallas) — whose financial disclosures showed they were trading assets in 2020 that would have benefited from the Fed’s bailout in financial markets — are still ongoing. in progress.
- Both officials resigned shortly after their revelations came to light.
Quick catch up: At the end of February 2020, Clarida bought shares on the eve of an announcement that the Fed was poised to support financial markets and the economy when the coronavirus arrived in the US. The Fed said the trading was part of its routine portfolio rebalancing.
- But an amended disclosure – uncovered by the New York Times in January this year – showed that he had sold a similar amount in the fund a few days earlier, raising the question of whether Clarida’s trades were less routine and more strategic.
- A Clarida spokesperson insisted the activity was part of the rebalancing.
A financial advisor to Powell’s financial trust made five trades in December 2019 during a so-called “blackout period,” during which Fed officials are not allowed to make trades, the memo says — but the watchdog found no evidence that Powell had any knowledge that the trades were executed during this time.
What they say: “I am pleased with the conclusions of the Office of the Inspector General of the Federal Reserve, which finds that during my tenure as vice chairman, I have gone above and beyond financial ethics and disclosure requirements,” 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 exceed ethical standards.”
- Clarida was already due to leave the central bank, although he left two weeks earlier than planned.
- Clarida’s spokesman said the early departure had nothing to do with the disclosure of trading activity that came to light, but rather the start of teaching at Columbia University for the spring semester.
Flashback: The Fed asked its watchdog in October to launch an independent investigation to see if senior officials’ trading activities were in line with its ethics rules and the law.
- The office conducted interviews, reviewed emails, broker statements, trading data and more.
- The Fed also revised trading rules for policymakers and senior staff, who are now prohibited from buying individual stocks and actively trading.
- The new rules came into effect this month. Some lawmakers say the changes don’t go far enough.