The vice chair of the Federal Reserve is resigning in the face of questions about his stock trading during the pandemic. Richard Clarida, whose term was in its last month, made the announcement Monday but did not elaborate, the Washington Post reports. "I will miss his wise counsel and vital insights," said Chair Jerome Powell, who faces a confirmation hearing Tuesday on a second term, said in a statement. Democratic Sen. Elizabeth Warren, who has urged an investigation, and other lawmakers have been critical of Fed leaders' stock trading, per CNBC.
A Trump appointee, Clarida is the third top Fed official to resign recently over accusations about his deals in connection with the Fed's plans to intervene and prop up the economy. Eric Rosengren, who ran the Boston office, and Robert Kaplan, leader of the Dallas office, also resigned after ethical questions were raised by their deals during the pandemic. Powell announced in October that the Fed's conflict-of-interest rules would be strengthened, including a new prohibition on active trading by Fed policymakers and senior staff members. They're to only invest in mutual funds and other diversified vehicles, per Politico.
The latest resignation "shows there is an epidemic of ethical and legal violations at the highest levels of the Federal Reserve that the chairman has failed to address," said Dennis Kelleher, president of Better Markets. Simon Johnson, an economist at MIT, called it "a shocking and disturbing development," adding, "We need a full investigation of who traded what, when, and on the basis of which nonpublic information in 2020 and 2021." President Biden has nominated Fed Governor Lael Brainard to fill the vacancy on the board. (More Federal Reserve stories.)
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