The Fed vice-president is said to have sold shares in a US equity fund worth at least one million dollars in early 2020 and bought them back a little later for a similar amount.
(Photo: Reuters)
Richard Clarida surprisingly announced his early withdrawal from the US Federal Reserve (Fed) on Monday. Fed chief Jerome Powell’s deputy wants to give up his post on Friday. Actually, his term of office would have expired at the end of January.
Because of controversial securities transactions at the beginning of the pandemic, he would have wanted to withdraw anyway. But new allegations have apparently increased the pressure on him. Various high-ranking monetary politicians have been criticized for months because they could have benefited from their own measures with private equity deals from the unprecedented rescue operations in the pandemic.
At the beginning of 2020, Clarida is said to have sold shares in a US equity fund worth at least one million dollars and bought them back a little later for a similar amount. That happened the day before the Fed announced major monetary policy props. The “New York Times” first reported about it last week. Clarida had apparently only given these transactions in December in an additional mandatory notification.
The heads of the regional central banks in Dallas, Robert Kaplan, and in Boston, Eric Rosengren, had also resigned from their offices in recent months because of criticism of their securities purchases.
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Powell had announced a “legal review” of the incidents in the fall. “We will tackle the matter and address it appropriately,” he clarified. Clear rules are also in Powell’s own interest: the Fed chief, who was nominated for a second term by US President Joe Biden, has been holding municipal bonds for many years. They also benefited from the Fed’s bailout, as the central bank bought municipal bonds for the first time. On Tuesday, Powell will testify before the Senate, which has to vote on his second term.
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