By Jeanna Smialek
Richard Clarida, the Federal Reserve’s vice chair, announced on Monday (US time) that he would resign from his position two weeks earlier than planned. Although he did not give a reason, he has faced renewed scrutiny about trades he made in 2020 as the central bank was poised to rescue financial markets.
“With my statutory term as governor due to expire on January 31, 2022, I am writing to inform you that it is my intention to resign from the board on January 14, 2022,” Clarida wrote in a letter to President Joe Biden that the Fed released on Monday.
The New York Times reported last week that Clarida had corrected his 2020 financial disclosures in late December. Ethics experts said that one of his trades raised questions: He sold a stock fund February 24 before repurchasing it February 27, just before Fed Chair Jerome Powell announced February 28 that the Fed stood ready to help markets and the economy.
His initial disclosures noted only the purchase of the stock fund, which the Fed explained as a portfolio rebalancing. The rapid move out of and back into stocks called that explanation into question, some experts said, and the repurchase could have put Clarida in a position to benefit as the Fed reassured markets.
Neither the Fed nor Clarida provided an explanation of what happened with the trade, although the Fed’s ethics office noted in the updated filing that it still appeared to be in compliance with conflict-of-interest laws.
Clarida’s updated disclosure drew widespread media coverage and lawmaker attention: Senator Elizabeth Warren called on the Fed to promptly release more information about it and about other trades from top Fed officials in light of the news.
It was also an inopportune moment for Powell, who has been renominated to his position by Biden and is scheduled to appear on Tuesday at a confirmation hearing before the Senate Banking Committee.
Warren sits on that committee, so Powell is almost sure to face questions about why Fed officials traded so actively in 2020.
Powell and his colleagues have revamped the central bank’s ethics guidelines — in October releasing plans to overhaul them and prevent many types of financial activity, including trading during times of turmoil. He may point to that as a sign of how seriously the Fed has taken the issue.
This article originally appeared in The New York Times.
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