Business

Second Federal Reserve Commander Resigns After Trading Scandal

Richard Clarida, the charismatic vice chairman of the Federal Reserve, is stepping down after coming under close scrutiny over the transactions he made at the start of the coronavirus pandemic.

The US central bank announced on Monday that Clarida, whose four-year term expires at the end of this month, will leave her post on Friday.

Clarida’s Resignation Following Revised Revelations step into the light Last week, it showed he was more active in the financial markets in 2020 than he was in his first divestment.

His departure marks the third major resignation by a senior Fed official in recent months because of trading activity. Eric Rosengren and Robert Kaplan, who headed two regional bank branches, resignation in September.

“It is extremely bad for the central bank that three of its top officials resign within a few months for inappropriate reasons,” said a former Fed employee.

The first transaction scandal broke out in september when Rosengren and Kaplan were spotted regularly buying and selling stocks individually last year while also holding shares in several hedge funds.

Clarida, meanwhile, moved $1 million to $5 million from a bond fund to a stock fund just days before the Fed announced emergency measures to shore up financial markets amid the Covid-19 crisis. increase.

Last week, the revised disclosures revealed that three days before the transactions were reported, Clarida sold between $1 million and $5 million in shares from the same stock fund. The Fed vice chairman said his failure to report those transactions was the result of an “inadvertent error”.

The previously unreported transactions called into question the Fed’s earlier explanation that Clarida’s transactions were part of a “pre-planned rebalancing.”

“The initial Clarida transactions were bad enough, but underreporting is a no-no,” said David Wessel, director of the Center for Monetary and Financial Policy at the Brookings Institution, a Washington think tank. undeniable.

Wessel added: “This is not good for the Fed, that is for sure, and it will spark criticism from people who have argued for years that Fed officials are an elite group of people who are more comfortable with bankers than the rest of society. “

In her resignation letter to President Joe Biden on Monday, Clarida, who has served in her role since 2018, made no mention of the transaction controversy.

Ethics experts have called for the Fed’s independent government watchdog to expand investigation on the legitimacy of transactions recently disclosed by Clarida. The investigation is now examining whether other transactions by top officials meet ethical standards and comply with the law.

In response to the scandal, the Fed overhaul Its trading rules for senior staff came in October, implementing an outright ban on individual stock purchases and barring officials from making many other investments.

In a letter to Biden, Clarida said it was a “distinct honor and tremendous privilege” to work at the Fed and that he was “proud” to have had the opportunity to help shape central bank policy. .

Ahead of Clarida’s resignation, Jay Powell, Fed chair, said: “Rich’s contributions to our monetary policy considerations. . . will leave a lasting impact in the central banking sector.”

Source link

news7h

News7h: Update the world's latest breaking news online of the day, breaking news, politics, society today, international mainstream news .Updated news 24/7: Entertainment, Sports...at the World everyday world. Hot news, images, video clips that are updated quickly and reliably

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button