Federal Reserve Vice Chairman Richard Clarida defended himself on Tuesday from allegations that he shifted his investment portfolio right as the Federal Reserve was awakening to the magnitude of the looming coronavirus pandemic.
In brief remarks during a speech to the Institute for International Finance, Clarida noted that he has been an economic policymaker for 40 years.
“I’ve always acquitted myself honorably and with integrity in respect to the obligations of public service,” Clarida said. He did not discuss any of the specifics of the allegations.
Outside experts who want to reform the Fed uncovered some transactions that Clarida reported that he made in late February 2020. The week after the trades, the Fed started to slash its benchmark interest rates in an effort to keep the pandemic from becoming a severe financial crisis.
According to the records, Clarida shifted fund from a bond portfolio to two stock portfolios. These invested provided sizeable returns over the past 19 months.
Two other senior Fed officials — Dallas Fed President Robert Kaplan and Boston Fed President Eric Rosengren — resigned last month when it was revealed they were active in trading stocks and other securities during the pandemic.
In his brief remarks, Clarida made no mention of resigning and talked about the goals he would like to meet before his term on the Fed board of governors expires on Jan. 31.
Sen. Elizabeth Warren, a Democrat of Massachusetts, alleging a “culture of corruption among high-ranking Fed officials,” has asked the Securities and Exchange Commission to review the trades by the three Fed officials.
Warren says the scandal is another reason why Fed Chairman Jerome Powell should not get another four-year term as head of the central bank. President Joe Biden has said he has confidence in Powell but hasn’t made a decision on whether to renominate him to the post.
The yield on the 10-year Treasury note
has risen over the past month to above 1.6%.