Home Economy FirstFT: Fed’s second-in-command resigns over trading scandal

FirstFT: Fed’s second-in-command resigns over trading scandal


Good morning. This article is an on-site version of our FirstFT newsletter. Sign up to our Asia, Europe/Africa or Americas edition to get it sent straight to your inbox every weekday morning

Richard Clarida, the embattled vice-chair of the Federal Reserve, is stepping down after coming under scrutiny for trades he made at the onset of the coronavirus pandemic.

Clarida’s departure marks the third resignation of a senior Fed official in recent months over trading activity. Eric Rosengren and Robert Kaplan, who had headed two regional bank branches, resigned in September.

The resignation of Clarida followed amended disclosures that came to light last week that showed he had been more active in financial markets in 2020 than he first divulged.

The Fed said yesterday that Clarida, whose four-year term was set to expire at the end of this month, would leave his position on Friday.

Thanks for all your comments yesterday. Go to the bottom of this article for some earlier reader comments and email your thoughts on the Fed trading scandal to [email protected]. Thanks for reading FirstFT Americas. Here’s the rest of today’s news — Gordon

1. US and Russia extend Ukraine talks After almost eight hours of talks in Geneva between Wendy Sherman, US deputy secretary of state, and Sergei Ryabkov, Russia’s deputy foreign minister, Russia agreed to extend negotiations to try to resolve the security crisis in Ukraine.

  • Related news Russian troops will withdraw from Kazakhstan, the country’s president said, following a week of violent protests in which citizens demanded social and political change in the central Asian republic.

2. Companies raise $100bn on global debt market Corporate bond issuance reached more than a $100bn in the first week of 2022, with US deals reaching a record pace as finance chiefs sought to lock in low borrowing costs before benchmark interest rates climb.

Column chart of Corporate bond issuance ($bn) showing Companies race to raise fresh funds in 2022

3. Cerberus cuts bet on German banks The US private equity group is cutting its stakes in Deutsche Bank and Commerzbank as the group scales back an ill-fated bet on Germany’s two biggest lenders. It disclosed the holdings in 2017, gambling on a swift recovery of Germany’s ailing banking sector as well as a potential merger of the Frankfurt-based rivals.

4. Airbus retains crown as biggest jet maker Airbus has retained its title over rival Boeing as the world’s biggest aeroplane maker for the third year in a row. The European aerospace champion said it had delivered 611 revenue-generating aircraft last year, an increase of 8 per cent over 2020.

5. Google’s last-ditch lobbying to influence EU tech rules The Silicon Valley giant is making a last-minute effort to change incoming laws on Big Tech, as politicians and officials in Brussels take aim at advertising, email and targeted social media posts.

“Top executives in California have known about the [Digital Markets Act] all along but they are only waking up now” — Google insider

Coronavirus digest

  • Nasdaq, the index of technology stocks in New York, briefly fell into correction territory yesterday as investors dumped growth companies in anticipation of interest rate rises in the US. A late rally helped the index eke out a small gain.

  • China has locked down another city as it seeks to stamp out the spread of the highly infectious Omicron variant. Residents of Anyang, a city of 5.5m in central China’s Henan province, were ordered to stay at home while mass Covid-19 testing takes place.

  • Boris Johnson is facing fresh questions about his government’s adherence to the country’s lockdown rules after it emerged that the UK prime minister attended a “bring your own booze” event in the Downing Street garden when the UK was subject to lockdown restrictions.

  • Ikea has cut sick pay for some unvaccinated staff in the UK who are self-isolating after contact with a positive Covid-19 case, joining a growing list of companies that are adopting a tougher approach to workers who decline a vaccination.

  • Andreas Utermann’s solution to the anti-vaxxer problem is based on the insurance market’s approach to pricing risk. “One way to nudge the unvaccinated to get a jab is to require that those who remain unvaccinated by choice pay for the cost of their own medical care,” he writes.

The day ahead

Jay Powell confirmation hearing The Federal Reserve chair will tell lawmakers that the US central bank is prepared to take action to ensure elevated inflation does not become entrenched during his confirmation hearing in front of the Senate banking committee.

  • Analysis Powell will face a grilling from Elizabeth Warren, a member of Senate banking committee, over Clarida’s departure. The liberal Democratic senator from Massachusetts has been a constant thorn in Powell’s side.

Omicron hearing Rochelle Walensky, director of the Centers for Disease Control and Prevention, Anthony Fauci, President Joe Biden’s chief medical adviser, and Janet Woodcock, acting commissioner of the Food and Drug Administration, testify before the Senate health committee on the Omicron variant and the federal response to new Covid-19 variants.

Voting rights US President Joe Biden and vice-president Kamala Harris head to Atlanta to speak about voting rights. In his speech, the president is expected to voice support for changing the Senate filibuster rules, according to the New York Times.

What else we’re reading

China applies brakes to Africa lending From almost nothing, Chinese banks now make up about one-fifth of all lending to Africa, concentrated in strategic or resource-rich countries including Angola, Kenya and Zambia. But Beijing has signalled a more cautious approach following a 20-year lending spree. What does that mean for the continent?

You are seeing a snapshot of an interactive graphic. This is most likely due to being offline or JavaScript being disabled in your browser.

Will the UK and EU agree a deal on N Ireland? Talks will resume this week on how to resolve the long-running dispute over trading arrangements. But officials remain far apart on the substance of how to manage the new trade border in the Irish Sea. The Financial Times looks at the prospects for a deal.

Don’t roll your eyes when lawyers complain about overwork Sarah O’Connor’s instinct is to reach for a tiny violin when she hears complaints of burnout from lawyers and junior bankers. But listening to the concerns of people at the top can inform the debate over how to improve jobs at the bottom, she says.

How to ask for a pay rise — and get one! Claer Barrett, the FT’s moneymaking expert, pulls apart that big, scary box labelled ‘Asking for a pay rise’ in this week’s episode of the Money Clinic. This is a repeat of an earlier episode.

A hunting boom in the Midwest prompts soul-searching The pandemic has sent city slickers back to the land, writes Patti Waldmeir. “I’ve never seen so many people in the woods,” Jeramie Hotz, a Wisconsin deer hunter-cum-advertising manager, tells Patti.

Your feedback

Last week, we asked whether nations should pursue a “zero-Covid” policy. Here’s what readers had to say:

“Pursuing a zero-Covid policy is essentially a futile and fragile strategy. Indeed, a country has to open up and when it does there will be Covid transmission so ultimately it is a flawed approach that renders the extreme measures that have gone before as meaningless. We sometimes laud countries for their supposed successful suppression of the virus but at what cost to their society? There needs to be a more measured balance adopted.

It also seems to me that those countries pursuing zero Covid are shamelessly letting other countries suffer the pain as they develop the medical and societal approaches to overcome Covid whilst they themselves will seek to reap the benefits of those gains. A zero-Covid approach only works provided other countries are not sealed and do not adopt the same approach (we need only witness the supply chain challenges to understand this). The ultimate free ride perhaps?” — AM, Hong Kong 

“Sadly, even the fact that we can discuss zero Covid means that it is a policy, and thus political. Certainly public health concerns are wrapped up therein, but the main driver of zero Covid for . . . leaders is to underscore the success of their earlier lockdown and continued provision of substandard vaccines. It is difficult to fault their lockdown strategy, but Covid has proven that more than brute force is necessary to halt the joint health and economic damage of the pandemic. Truly impressive leadership should accept that policy direction must change with evolving realities, even if these realities admit scientific mistakes” — Spencer Dodington, Islington, London

Thank you for reading and remember you can add FirstFT to myFT. You can also elect to receive a FirstFT push notification every morning on the app. Send your recommendations and feedback to [email protected]

Europe Express — Your essential guide to what matters in Europe today. Sign up here

The Week Ahead — Start every week with a preview of what’s on the agenda. Sign up here

Source link

Previous articleRashmika Mandanna cheers for rumoured BF Vijay Deverakonda as she catches first glimpse of Liger
Next articleUK Covid live: Labour granted urgent question on No 10 lockdown party revelations | Politics