Fed vice chair Richard Clarida resigns over trading scandal

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Fed vice chair Richard Clarida resigns over trading scandal

Richard Clarida, the vice chair of the Federal Reserve who has come under fire for making trades during the financial crisis brought on by the pandemic, announced on Monday that he will resign from the board effective on Friday.

The announcement, which came two weeks before his resignation was to go into effect, came in the form of a letter that Clarida sent to President Joe Biden.

“With my statutory term as governor due to expire on Jan. 31, 2022, I am writing to inform you that it is my intention to resign from the board on Jan. 14, 2022,” he wrote to the president.

The letter was released by the Fed on Monday.

In February 2020, Clarida made stock trades just as the Fed was preparing to step in and rescue the economy in the early stages of the coronavirus pandemic.

Clarida recently amended disclosure forms to indicate that he bought shares in an investment fund that holds stocks on Feb. 27 — even though he bought into the same fund three days earlier, according to The New York Times.

The move into and out of stock options came as the markets were tanking due to the effects of the coronavirus pandemic.

Clarida is the third senior Fed official to step down in the wake of reports about stock trades made just before the markets collapsed.

Other top Fed officials including Chair Jerome Powell, Dallas Fed President Robert Kaplan, and Boston Fed President Eric Rosengren also cashed out even though they had knowledge of the bank’s plan to boost financial markets during the pandemic.

Richard Clarida came under fire for trades made during the financial crisis brought on by the COVID-19 pandemic.
Bloomberg via Getty Images

Both Kaplan and Rosengren resigned after news of the transactions were reported by The Wall Street Journal.

Powell also sold up to $5 million worth of stock options just before the markets tanked in the fall of 2020.

Biden recently nominated Powell to serve a second term despite opposition from his own party, including progressive Senator Elizabeth Warren.

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