Fed Vice Chair Clarida to step down early following scrutiny over his trades during pandemic

Richard Clarida, the Federal Reserve Vice Chairman, said Monday that he will be leaving his post with just a few weeks left in his term.

Clarida said he will be leaving his post this Friday. His term ends on January 31.

Clarida made trades in February 2020 around the time when the Fed was preparing to roll out its most aggressive policy tools to combat the Covid crisis.

Rich contributed to monetary policy deliberations and his leadership of the Fed's first-ever public review of our monetary policy framework will leave a lasting impact in the field of central banking. I will miss his wise counsel.

Clarida's exit comes amid heightened scrutiny over what he had described as a pre-planned portfolio rebalancing. The New York Times reported that Clarida sold shares in three stock funds three days before he would buy them back.

Concerns that the spreading coronaviruses could cause significant damage led to a drop in the markets. The Fed policymakers met on February 26 to discuss how they might fight the outbreak.

Within weeks, the Fed would cut its benchmark interest rate to zero and institute an unprecedented array of lending and liquidity programs to help the economy and financial markets function.

Clarida did not mention the controversy in her announcement, which has been a focal point of Fed criticism. Two regional Fed presidents, Eric Rosengren of Boston and Robert Kaplan of Dallas, resigned after questions over their trading activities.

Clarida said serving on the Fed was an honor and noted the measures it took during the epidemic.

He said he was proud to have served with his Federal Reserve colleagues as they put in place historic policy measures that steered the economy away from depression and that have supported a robust recovery in economic activity and employment since. There is still road to walk and damage to be repaired.

Powell is scheduled to appear before a Senate committee for his confirmation hearing to a second term next week. The hearing will happen Tuesday. Lael Brainard will face a hearing to be confirmed as vice chairman of the Fed.