Fed Vice Chair Clarida to step down early following scrutiny over his trades during pandemic
Federal Reserve Vice Chairman Richard Clarida said Monday he will be leaving his post with just a few weeks left on his term and amid revelations regarding his trading of stock funds.
In an announcement released Monday afternoon, Clarida said he will be stepping down from his post this Friday. His term expires on Jan. 31.
The move comes following additional disclosures regarding trades Clarida made in February 2020, around the time when the Fed was getting ready to roll out what eventually would become its most aggressive policy tools ever, in an effort to combat the Covid crisis.
“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,” Fed Chairman Jerome H. Powell said in a statement. “I will miss his wise counsel and vital insights.”
Clarida’s exit comes amid heightened scrutiny over what he had described as pre-planned portfolio rebalancing on Feb. 27, 2020. However, recent disclosures, first reported by the New York Times, showed that three days earlier, Clarida sold shares in three stock funds that he would repurchase on the 27th.
Markets dropped on Feb. 24 amid worries that the spreading coronavirus could cause substantial economic damage. On Feb. 26, Fed policymakers huddled to discuss what policy moves they might take to combat what eventually would become a full-blown pandemic.
Within weeks, the Fed would cut its benchmark interest rate to zero and institute an unprecedented array of lending and liquidity programs to help the economy and financial markets function.
Clarida’s announcement did not mention anything about the controversy, which has been a focal point of Fed criticism from Sen. Elizabeth Warren (D-Massachusetts) and some other lawmakers. Two regional Fed presidents, Eric Rosengren of Boston and Robert Kaplan of Dallas, both resigned following questions over their trading activities.
Clarida called serving on the Fed “a distinct honor and immense privilege” and noted the measures it took during the pandemic.
“I am proud to have served with my Federal Reserve colleagues as we, in a matter of weeks, put in place historic policy measures that, in conjunction with fiscal policy, steered the economy away from depression and that have supported a robust recovery in economic activity and employment since,” he said in a resignation letter to President Joe Biden. “There is still road left to walk and damage to be repaired.”
The resignation comes the same week Powell appears before a Senate committee for his confirmation hearing to a second term. That hearing will happen Tuesday. Two days later, Fed Governor Lael Brainard will face a hearing to be confirmed as vice chairman to take Clarida’s spot.