Fed Vice Chair Richard Clarida to resign early amid trading scrutiny

Clarida, appointed by President Donald Trump in 2018, said in his resignation letter to President Joe Biden it has been “a distinct honor and immense privilege to serve” in the post. His term was set to expire Jan. 31.

“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 Chair Jerome Powell said in a statement. “I will miss his wise counsel and vital insights.”

Clarida did not give a reason for his decision, but he has faced increasing scrutiny regarding a recent New York Times report over trades he made in February 2020—just before the board made decisions to reassure the markets in the face of disruptions caused by the Covid-19 pandemic.

In response to Clarida’s trading activity, a Fed spokesman, speaking on behalf of Clarida, noted at the time the stock moves represented a “pre-planned rebalancing to his accounts.” Clarida later restated the amount of money involved in the transactions in a disclosure to the Fed in December, according to The New York Times.

“Members of the Board of Governors of the Federal Reserve System and presidents and first vice presidents of the Federal Reserve Banks have a special responsibility for maintaining the integrity, dignity, and reputation of the system,” Fed guidance on senior official conduct states. “Accordingly, they should scrupulously avoid conduct that might in any way tend to embarrass the system or impair the effectiveness of its operations.”

Some critics characterized Clarida’s moves as an attempt to personally profit from the pandemic. Dennis Kelleher, president of nonprofit group Better Markets, said in a statement Monday that Clarida’s conduct and apparent attempt to cover it up “made him unfit to hold office.”

Clarida is not the first Fed official whose trading activity has come under scrutiny. Robert Kaplan, former president of the Federal Reserve Bank of Dallas, and Eric Rosengren, former president of the Federal Reserve Bank of Boston, were also criticized for their trading activities during the pandemic. Kaplan and Rosengren each retired early because of the fallout.