- Federal Reserve Vice Chairman Richard Clarida said Monday that he plans to resign on Friday.
- The resignation arrives two weeks earlier than expected and amid scrutiny over his 2020 stock trading.
- Government disclosures showed Clarida trading equity funds ahead of the Fed’s major announcement in 2020.
Vice President Richard Clarida will step down on Friday — two weeks earlier than planned — amid fresh scrutiny of stock trades made early in the pandemic.
While the Fed’s announcement did not give a reason for Clarida’s early departure, the move comes after Clarida plunged into the hot water of stock trading in early 2020. October disclosures showed that he was collecting cash in stock funds on February 27, 2020, one day before The Federal Reserve hinted at possible policy measures to help the US economy. The central bank announced unprecedented policy support after weeks, spurring economic activity and helping financial markets rebound into 2020.
Clarida faced a backlash in early January after updated disclosures that shed more light on the trades. Corrected documents showed Clarida withdrawing funds from the stocks on February 24, 2020 before pushing the funds into the equity funds three days later. The Fed first described the February 27 deals as an appropriate “rebalance,” but the inside and outside trades have raised new questions about trading activity. The New York Times first reported the revised disclosures.
The vice president is now scheduled to resign on Friday instead of the Jan. 31 end date of his term.
“Rich’s contributions to our monetary policy deliberations, and his leadership of the Federal Reserve’s first public review of our monetary policy framework, will have a lasting impact on the field of central banks,” Fed Chair Jerome Powell said in a statement.
Clarida told President Joe Biden in a letter Monday that serving on the central bank’s board of directors was a “distinguished honor and a tremendous privilege.”
Clarida is one of a handful of Federal Reserve officials facing scrutiny over their pandemic-era stock trades. Watch groups urged Boston Fed President Eric Rosengren and Dallas Fed President Robert Kaplan to resign in September after revelations that the two regional chiefs had traded stocks before easing central bank policy. Rosengren announced early retirement on September 27 due to health concerns, while Kaplan directly acknowledged his trading when he announced his early resignation on the same day.
The Federal Reserve introduced new investment restrictions in late October as it looked to clamp down on ethically questionable trading in the wake of the scandal. The rules prohibit policy makers and senior employees from buying individual stocks, holding individual bonds, and investing in alternative market products such as derivatives. Investing in mutual funds is allowed, but positions must be held for at least a year before officials can exit.
Powell said in a statement released in October that the updated rules should help the Fed avoid similar conflict of interest disputes.
“These tough new rules raise the bar high in order to reassure the public we serve that all of our senior officials maintain a single-minded focus on the Federal Reserve’s overall mission,” he added.