Federal Reserve Vice Chairman Richard Clarida said Monday he would leave his post with just weeks in office and amid revelations about his stock fund trading.
In an announcement released Monday afternoon, Clarida said he would step down from his post this Friday. His term of office ends on January 31st.
The move follows additional disclosures on trades Clarida made in February 2020, around the time the Fed was preparing to launch its most aggressive policy tool ever to combat the Covid crisis.
“Rich’s contributions to our policy thinking and his leadership of the Fed’s first-ever public review of our monetary policy framework will leave a lasting impression on the central banking arena,” Fed Chair Jerome H. Powell said in a statement. “I will miss his sage advice and vital insights.”
Clarida’s exit comes amid heightened scrutiny of what he had described as a pre-planned portfolio rebalance on February 27, 2020. However, recent disclosures, first published by The New York Times, showed that Clarida had sold shares in three equity funds three days before that he would buy back on the 27th.
Markets collapsed on February 24 amid fears that the spreading coronavirus could wreak significant economic damage. On February 26, Fed policymakers huddled together to discuss what policy steps they could take to combat what would eventually become a full-blown pandemic.
Within weeks, the Fed would cut its benchmark interest rate to zero and implement an unprecedented series of lending and liquidity programs to get the economy and financial markets working.
Nothing was mentioned in Clarida’s announcement about the controversy that was the focus of criticism of the Fed by Sen. Elizabeth Warren (D-Massachusetts) and several other lawmakers. Two regional Fed Presidents, Boston’s Eric Rosengren and Dallas’ Robert Kaplan, both resigned after questions about their trading activities.
Clarida called serving at the Fed “a special honor and immense privilege” and mentioned the actions she took during the pandemic.
“I’m proud to have worked with my Federal Reserve colleagues as we enacted historic policy actions in a matter of weeks that, combined with fiscal policy, have lifted the economy out of the depression and supported a robust recovery in economic activity and employment.” since then,” he said in a letter of resignation to President Joe Biden. “There is still a road to go and damage that needs to be repaired.”
The resignation comes the same week that Powell appears before a Senate committee for his second term confirmation hearing. That hearing will take place on Tuesday. Two days later, Fed Governor Lael Brainard will face a hearing to be confirmed as vice chairman to take Clarida’s place.