According to a central bank spokesman, the Federal Reserve has asked its inspector general’s office to independently review whether the trading activity of some top officials has violated the law.
Three Fed officials questioned their business activities in 2020 under central bank surveillance. Late last month, Dallas Fed President Rob Kaplan and Boston Fed President Eric Rosegren announced their resignations after revealing their business history.
At the time, Fed Chairman Jerome Powell told reporters that “no one is happy that the FOMC is in this position” and added that he welcomed the move to tighten trade rules.
“It’s an issue we take very seriously,” Powell said.
Instead of a comeback, the scandal this week went into Powell’s inner circle, where Fed Vice Chairman Richard Clarida trades in the spotlight.
Last Friday, Dartmouth economics professor Danny Blanchflower, a former member of the Bank of England’s Monetary Policy Committee, tweeted Claridar trading activity and so-called internal trading.
Records show that funds from a mutual fund of the Clarida Fund to two stock funds began to move significantly in late February 2020, just as the central bank began to move significantly in response to the epidemic.
“I was a central banker. You shouldn’t do it. It’s very offensive, “said Blancheau.
The Fed has always protested that the commercial activities of the three officials do not violate the rules of ethics of the central bank. However, this is not the case.
Democrat Sen. Elizabeth Warren of Massachusetts on Monday called on the Securities and Exchange Commission to examine whether Fed officials’ trading is legal. He said the trading reflected the “brutal verdict” of the three officials.
The Fed said in a statement that talks with the inspector general’s office began last week.
A Fed spokesman said: “We welcome this review and will take appropriate action based on its findings.”
The scandal comes at an uncomfortable time for Powell. His first term ends in February, and the White House is silent on whether President Joe Biden will reappoint him.
Asked by Politico whether Biden would take stock of his trading activity in a review of his Powell record, Senate Banking Committee Chairman Sherrod Brown replied: “It’s a matter for the president.”