Controversial trading activities from Federal Reserve Chairman Jerome Powell and former Vice Chairman Richard Clarida didn’t break any rules or laws, the central bank’s Office of Inspector General ruled Thursday.
The report covered a period from 2019-21 when the two top-ranking officials traded stocks and funds while the central bank used monetary policy to influence financial markets.
The period included the weeks before the Covid-19 pandemic declaration as the Fed was slashing interest rates and instituting other market supports, moves that would intensify following the pandemic declaration.
“We did not find evidence to substantiate the allegations that former Vice Chair Clarida or you violated laws, rules, regulations, or policies related to trading activities as investigated by our office,” Inspector General Mark Bialek told Powell in a letter. “Based on our findings, we are closing our investigation into the trading activities of former Vice Chair Clarida and you.”
Federal Reserve Board Chairman Jerome Powell speaks to reporters after the Federal Reserve raised its target interest rate by three-quarters of a percentage point to stem a disruptive surge in inflation, during a news conference following a two-day meeting of the Federal Open Market Committee (FOMC) in Washington, U.S., June 15, 2022.
Elizabeth Frantz | Reuters
While the report cleared Powell and Clarida, Bialek said evaluations of trades from other top Fed officials are ongoing.
Former regional presidents Robert Kaplan of Dallas and Eric Rosengren of Boston retired following disclosures of their investment portfolio activities. Clarida also left, stepping down in January just before assuming a teaching job at Columbia University.
The OIG found “that I went above and beyond financial ethics and disclosure requirements during my tenure as Vice Chair,” Clarida said in a statement.
“I have always been committed to conducting myself with integrity and respect for the obligations of public service, and this report reaffirms that lifelong commitment to exceeding ethical standards,” he added.
Earlier this year, the Fed adopted a stringent set of new rules that prohibit officials from trading individual stocks and bonds as well as cryptocurrencies.