Tuesday, January 11, 2022
Clarida resigns from office
Investment scandal costs Fed vice-chief the job
The decisions of the US Federal Reserve occasionally cause panic in the run-up to Wall Street. Fed Vice-President Clarida is said to have taken advantage of this and enriched himself with private stock market transactions thanks to his insider knowledge. He now pulls the rip cord.
The US Federal Reserve’s vice-chairman Richard Clarida is stepping down around two weeks before the end of his term after reports of questionable stock market transactions. The Fed said he would resign on Friday. Federal Reserve Chairman Jerome Powell said he would miss Clarida’s “wise advice and decisive reflection.” Clarida had been Vice President of the Fed since the end of 2018. According to plan, his term of office was not due to expire until the end of January.
Clarida came under fire last year for private stock market trades at the beginning of the pandemic, when the markets collapsed in early 2020. The central bank tightened its rules on the disclosure of private transactions in the financial markets because of the criticism of Clarida and other top representatives. According to a report in the “New York Times” on Thursday, Clarida’s stock market transactions are said to have gone further than had become known in the context of the disclosure requirement last year. The day before an important Fed decision to intervene in the markets to stabilize, he bought an equity fund. Prices rose after the Fed intervened.
According to the report, the central bank had previously described Clarida’s purchase as a long-term restructuring of its portfolio. According to the New York Times, an update of his reported deals in 2020 is now said to have shown that he had sold the fund only three days earlier – amid the general market panic.
Influential Democratic Senator Elizabeth Warren sharply criticized the Fed. It now needs “complete transparency regarding the worrying evidence of possible insider trading by representatives of the Fed,” she wrote on Twitter. At the end of November, US President Joe Biden nominated Lael Brainard, a member of the Central Bank Council, as the new Vice President of the Fed. The US Senate has yet to approve this change.