Fed Has Yet to Provide Senator Warren with Complete Information on Fed Officials' Trades, Warnings from Fed Ethics Officers, and the New Fed Ethics Policy

January 11, 2022 - WASHINGTON, D.C. — United States Senator Elizabeth Warren (D-Mass.) called on Federal Reserve (Fed) Chair Jerome Powell to immediately release information related to Fed officials' trades and changes to the Fed’s ethics policy after new and troubling revelations about Vice Chair Richard Clarida’s trades in March 2020 . Last week, the New York Times revealed that Vice Chair Clarida not only purchased shares in a stock investment fund the day before the Fed announced it was prepared to protect the economy from the pandemic’s fallout, but he had previously sold his shares in that same fund three days earlier as financial markets plunged. The revelations raise concerns that Clarida may have been trading on inside information related to planned policy moves, and that the Fed has failed to disclose the full scope of officials' trading practices to the public. Senator Warren is asking for detailed information from the Fed by January 17, 2022.

“The Fed has failed to respond to two of my previous inquiries… This refusal to provide information to Congress became even more troubling after a report last week in the New York Times revealed that one Fed official’s trades “went further than first disclosed,” raising fresh questions about the actions and intent of Fed Vice Chair Richard Clarida. I am deeply concerned that your continued refusal to release information about Fed officials’ trading is at odds with your stated commitment to address the scandal “forthrightly and transparently” and, that particularly in light of the new report, it raises suspicions that the Fed may be failing to disclose the full scope of the scandal to the public,” wrote Senator Warren. 

In September 2021, reports indicated that high-ranking Fed officials had engaged in trades of individual stocks and other investments at the height of the pandemic; weeks later, reporting revealed that Fed officials were warned about the ethics risks of trading stocks, bonds, and other investments in March 2020. Following Senator Warren’s request for information, the Fed released an excerpt of the email warning officials to “avoid unnecessary trading for a few months as the Fed dived deeper into markets,” but the Fed has yet to release the full email or any other ethics guidance issued at the time. Senator Warren is asking the Fed to respond to her requests for critical information so Congress and the public can evaluate the full extent of trading in individual stocks by Fed officials, the extent to which Fed officials were warned of the risks from their trading, and whether the changes to the Fed’s ethics practices are sufficient to prevent future financial conflicts of interest. 

As the ethics scandals involving top level Fed officials were revealed in September and October of this year, Senator Warren called out the culture of corruption and raised concerns over conflicts of interests that have undermined public confidence. She previously called on the SEC to investigate the extent of trading activity by high-level Federal Reserve officials and whether these trades might have violated insider trading laws. She also urged Regional Fed leaders to follow the robust and comprehensive ethics guidelines in her Anti-Corruption and Public Integrity Act. Senator Warren has long championed tighter ethics rules that prohibit all government officials from holding or trading individual stock that may be influenced by their agency, department, or actions. 

Text of Letter (PDF)
Source: Senator Elizabeth Warren

Richard H. Clarida announces his intention to resign from the Board of Governors of the Federal Reserve System on January 14, 2022

Richard H. Clarida announced on Monday his intention to resign from the Board of Governors of the Federal Reserve System on January 14, 2022. He has been a member of the Board and Vice Chair since September 17, 2018.

"Rich's contributions to our monetary policy deliberations, and his leadership of the Fed's first-ever public review of our monetary policy framework, will leave a lasting impact in the field of central banking," said Chair Jerome H. Powell. "I will miss his wise counsel and vital insights."

During Dr. Clarida's time on the Board, he served as chair of the Board's Committee on Economic and Monetary Affairs, which oversees the work of the divisions of Monetary Affairs, Research and Statistics, and International Finance. He also served as chair of the Federal Open Market Committee's communication subcommittee. In that role, he led the 2019 review of the Federal Reserve's monetary policy strategy, tools, and communication practices, and he oversaw the creation of the Fed Listens initiative. Dr. Clarida has also represented the Board internationally, including at the Bank for International Settlements, the Group of 20, the Group of Seven, the International Monetary Fund, and the Organisation for Economic Co-operation and Development.

Prior to his appointment to the Board, Dr. Clarida served as the C. Lowell Harriss Professor of Economics and International Affairs at Columbia University, where he taught from 1988 to 2018. From 1997 until 2001, Clarida served as chairman of the Department of Economics at Columbia University. In addition to his academic experience, Dr. Clarida served as Assistant Secretary of the U.S. Department of the Treasury for Economic Policy from February 2002 to May 2003, where he was awarded the Treasury Medal in recognition of his service. He also served on the Council of Economic Advisers under President Reagan.

Dr. Clarida received a B.S. in economics from the University of Illinois with Bronze Tablet honors and a M.A. and Ph.D. in economics from Harvard University.

Dr. Clarida is married with two children.

A copy of his resignation letter is attached.
Source: Federal Reserve