Fed’s No. 2 resigns after trading scandal

embattled Fed vice chair Richard Clarida is stepping down after scrutiny over his dealings during the outbreak.

Clarida, whose four-year term expires at the end of this month, will leave on Friday, the central bank announced on Monday.

Clarida’s resignation follows an amended disclosure, namely exposure Last week, it indicated that he has been more active in financial markets in 2020 than he initially revealed.

His departure marks the third time in recent months that a senior Fed official has resigned over trading activity. Eric Rosengren and Robert Kaplan headed two regional bank branches, Resign in September.

The trading scandal first erupted last September when Rosengren and Kaplan were caught frequently buying and selling individual stocks while also holding stakes in several investment funds.

Meanwhile, Clarida moved between $1 million and $5 million in equity funds from bond funds just days before the Federal Reserve announced emergency measures to shore up financial markets as the Covid-19 crisis intensified.

Last week, revised disclosures revealed that Clarida sold between $1 million and $5 million in shares from the same equity fund three days before the reported transaction. The Fed’s vice chair said his failure to report the transactions was the result of an “unintentional error.”

The previously unreported transaction calls into question the Fed’s previous explanation that the Clarida deal was part of a “pre-planned rebalancing.”

Clarida, who has held the role since 2018, made no mention of the deal controversy in Monday’s resignation letter to President Joe Biden.

Ethics experts call on the Fed’s independent government watchdog to expand its ongoing investigation The legality of Clarida’s recently disclosed transaction. It is already investigating whether other dealings by senior officials were ethical and in compliance with the law.

In response to the scandal, the Fed in October overhaul Its trading rules for senior employees completely prohibit the purchase of any personal stock and prohibit them from making many other investments.

In his letter to Biden, Clarida said it was a “unique honor and great privilege” to work at the Fed and that he was “proud” to have the opportunity to help shape the central bank’s policy.

Responding to Clarida’s resignation, Federal Reserve Chairman Jay Powell said: “Ritchie’s contribution to our monetary policy deliberations . . . will leave a lasting impact in the realm of central banking.”

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