Federal Reserve vice chairman resigns amid trading scandal

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Just last week, Clarida came under fire when The New York Times reported that he failed to properly disclose his 2020 trading activities in his original filings last year. In a correction to his 2020 financial disclosure, Clarida said he had sold between $1 million and $5 million in a stock fund three days prior to buying it, which indicates that he was actively trading.

In October 2021, Clarida was in the middle of controversy because he had moved between $1 million and $5 million out of a bond fund into a stock fund on Feb. 27, 2020. That was just a day before Fed Chairman Jerome Powell said that the central bank might move to cushion the economy when the pandemic hit the US. In his Dec. 16, 2021 note submitted to the Office of Government Ethics, Clarida referred to the exclusion of the said information as an “inadvertent error.”

Last year, Dallas Fed President Robert Kaplan and Boston Fed President Eric Rosengren also became the center of controversy for revelations that they had bought and sold stocks and real estate-linked assets in 2020, when the central bank was engaged in an extensive rescue of financial markets. Both men resigned within weeks of the issue.

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As vice chairman of the Fed, Clarida had a major hand in the central bank’s interest rate decisions over the last few years, including an overhaul of its policy framework designed to put a greater emphasis on broad and inclusive employment, and in tweaking the Fed’s framework to tolerate inflation moderately above 2%.