Fed’s Vice Chair Will Leave Early After 2020 Trades Cause Stir


Richard Clarida, the Federal Reserve Board’s vice chairman, said on Monday he will step down from his post at the central bank this week, amid a scandal over trades Clarida and other Federal Reserve officials made in the early days of the Covid-19 pandemic.

Key Facts

Clarida’s resignation will take effect Friday, 17 days before his term was supposed to expire, the Fed announced in a Monday release.

Clarida, an economist who has served as the central bank’s vice chair since 2018, did not give a reason for his departure in his resignation letter.

Clarida is the latest and most high-profile Fed official to exit amid questions about trading activities at the beginning of the pandemic, after the presidents of the Federal Reserve’s Boston and Dallas branches retired last fall amid trading controversies of their own.

In November, President Joe Biden nominated Federal Reserve Governor Lael Brainard to succeed Clarida as vice chair, though Brainard still awaits confirmation by the Senate.

Key Background

Clarida’s 2020 financial disclosures revealed that he moved upwards of $1 million out of a bond fund and into a stock fund on February 27, 2020, the day before Fed Chairman Jerome Powell said the central bank was prepared to take swift action amid the burgeoning pandemic, according to Bloomberg. A Federal Reserve spokesperson told Bloomberg in October 2021 that Clarida’s trades were a result of “pre-planned rebalancing,” but a New York Times report last week cast doubt on that. The Times found that Clarida amended his 2020 disclosure statement to reveal that on February 24, 2020, he sold the same stock fund he bought just three days later. The discrepancy in the disclosures was the result of “inadvertent errors,” a Fed spokesperson told Politico last week.

Chief Critic

Sen. Elizabeth Warren (D-Mass.), who sits on the Senate Banking Committee, penned a letter to Powell Monday afternoon pressing the Fed to respond to Clarida and others’ trades in early 2020. In the letter, Warren asked: “When did Fed officials first learn that Vice Chair Clarida had made “inadvertent errors” in his initial financial disclosure? When did Clarida file his amended disclosure? When was this amended disclosure made publicly available on the Office of Government Ethics website?”

Further Reading

Top Democrat says the Fed must release more details on its trading scandal. (New York Times)

A Fed Official’s 2020 Trade Drew Outcry. It Went Further Than First Disclosed. (New York Times)

Dallas Fed President Robert Kaplan Resigns Amid Scrutiny Over Trading — Hours After Boston Colleague Steps Down (Forbes)

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