A watchdog report absolves financial transactions made by two top Fed officials.

Transactions made by the two top executives in 2019 and 2020, when central banks were particularly active in financial markets, violated both the law and central bank policies, according to a review by the Federal Reserve oversight body. I didn’t.

The Inspector General’s report, released Thursday, cleared both Jerome H. Powell and former Vice-Chair Richard Clarida. Both are conducting transactions that have been the subject of media coverage, and in the case of Mr. Clarida, Member of Parliament And an ethics expert.

But the report reveals what happened in the 2020 transaction between former Federal Reserve Bank of Dallas President Robert S. Kaplan and Federal Reserve Bank of Boston President Eric Rosengren. I haven’t. Both men resigned after Rosengren quoted the health reasons for his departure and their financial transactions became the subject of intense media coverage.

“Investigation of senior Reserve Bank officials is underway.” The report said..

Still, the first phase of the trade scandal investigation, which shakes the normally stagnant central banks and heralds radical ethical reforms, was good news for the Fed. The transaction between Powell and Clarida “did not violate the laws, rules, regulations or policies investigated by our office,” the report said.

Clarida was particularly scrutinized for a series of transactions that occurred in early 2020 as the Fed was preparing for an early coronavirus pandemic response. He sold out his stock index on February 24 and bought his stock index again a few days later, shortly before the federal announcement that raised his stock. He later disclosed the first sale from his stock index after other transactions were investigated.

Watchdog reviews, including interviews with stakeholders and investigations of emails and other records, pointed out the omissions, but found that the transaction itself did not violate the rules.

The report does not elaborate on why Clarida lost inventory and returned to inventory within a few days when the Fed’s actions were being carefully monitored by Wall Street. Clarida’s representative, Tony Flat, said in a phone call with reporters that Clarida had sold out the equity fund to “create liquidity.” However, the market seemed stable, so he decided it was better to return to the equity fund.

Clarida’s stock fund repurchase took place on February 27. The next day, the central bank issued a statement stating that it was ready to support the turmoil market. Easy and secure Stocks were finally closed for the day, but volatile investors. Mr Flat said he was unaware of the February 28 statement when Clarida decided to buy back the fund the day before.

“He didn’t act on the inside information-that’s exactly what they were looking for,” Fratto said of the Watchdog Report.

Clarida’s resignation earlier than announced, shortly after the news of the February 24 stock fund sale surfaced, questioned his first explanation of the February 27 move as part of the rebalancing. rice field. Mr. Flat said Clarida’s decision to resign was based on the timing of the start of the semester at Columbia University, where he was scheduled to begin teaching, and had nothing to do with the deal.

Neither the Federal Reserve nor Mr. Clarida provided a reason for his slightly earlier departure at the time.

Powell’s transactions since 2019 have rarely raised his eyebrows and have been cleared by the Fed’s guard dog.

Powell’s financial adviser on family trusts closed the deal during the Fed’s blackout period in December 2019 (which officials are not supposed to trade). According to the report, these transactions were accidents. Powell’s wife overlooked the charitable donation, the timing of the transaction intended to do so, on the part of her adviser, and Powell’s wife was unaware that it happened during the power outage.

“I was very pleased with both the conclusions and explanations about Powell and what happened,” said Caleb Nigor, a researcher at Yale University’s Financial Stability Program, in response to the report. However, Mr. Clarida’s omissions and account explanations for the deal were unsatisfactory, he said.

“That’s definitely not enough of the story,” he said.