Richard Clarida, vice chairman of the Fed, resigns soon after escalation of trade scandal

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Richard H. Clarida, vice chairman of the Federal Reserve, announced Monday that he would resign from his post two weeks earlier than expected. Although he did not give a reason, he was the subject of a re-examination of the transactions he made in 2020 as the central bank was on the verge of saving financial markets.

“With my statutory term as governor expiring on January 31, 2022, I am writing to inform you that I intend to resign from the board of directors on January 14, 2022”, wrote Mr. Clarida in a letter to the president. . Biden that the Fed released on Monday.

The New York Times reported last week that Mr Clarida corrected his financial information for 2020 at the end of December. Ethics experts said one of his deals raised questions – he sold an equity fund on February 24 before buying it back on February 27, just before Jerome H. Powell, the Fed chairman, did not announce on February 28 that the Fed was ready to help the markets and the economy.

Its early disclosures only mentioned the purchase of the equity fund, which the Fed explained as a rebalancing of the portfolio. The rapid move out and back of stocks called that explanation into question, some experts said, and the buyout could have put Mr. Clarida in a position to benefit as the Fed reassured markets.

Neither the Fed nor Mr. Clarida provided an explanation of what happened with trade, although the Fed’s ethics office noted in the updated record that it still appeared to be in compliance with conflict of interest laws.

Mr Clarida’s updated disclosure garnered widespread media coverage and the attention of lawmakers: Senator Elizabeth Warren, Democrat of Massachusetts, called on the Fed to quickly release more information on it and others transactions of senior Fed officials in light of current events.

It was also an inopportune time for Mr Powell, who was reappointed to his post by Mr Biden who is due to appear in a confirmation hearing before the Senate Banking Committee on Tuesday.

Ms Warren sits on that committee, so Mr Powell is almost sure to be wondering why Fed officials negotiated so actively in 2020.

Mr Powell and his colleagues revamped the central bank’s ethical guidelines – issuing plans in October to revise them and prevent many types of financial activity, including trading in times of turmoil. He can point out that this shows how seriously the Fed has taken the issue.

This story is developing. Check back for updates.

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