Fed Chair Jerome Powell Faces Reappointment Amid Tumult

The administration is under pressure to make a prompt decision, in part because the Fed’s seven-person Board of Governors in Washington will soon face a spate of openings. One governor role is already open. Mr. Clarida’s term ends early next year, leaving another vacancy, and Randal K. Quarles’s term as the board’s vice chair for supervision will expire next week, although his term as a governor runs through 2032.

By announcing key picks soon, the Biden administration could ensure that someone was ready to step into Mr. Quarles’s leadership role. And nominating several officials at once could give the president a chance to show that he is heeding the concerns of Democrats in Congress, who want to see more diversity at the Fed and officials who favor tougher bank regulation.

But the ethics scandal threatens to complicate the picks.

Recent financial disclosures showed that Robert S. Kaplan at the Federal Reserve Bank of Dallas traded millions of dollars in individual stocks last year, and that Eric S. Rosengren at the Federal Reserve Bank of Boston traded real estate-tied securities even as he warned publicly about problems in that sector. The trades have drawn criticism because they occurred during a year in which the Fed hugely influenced a wide range of financial markets.

Both men resigned from their roles as regional presidents amid the controversy, though Mr. Rosengren said he was leaving for health reasons.

Attention has now turned to Mr. Clarida. All of his trades were in broad funds, not individual securities, and have been public since May, but have drawn attention amid the current reckoning. He sold a stake in a bond fund totaling at least $1 million and moved that money into stock funds on Feb. 27, 2020. The transaction gave him more exposure to stocks shortly before the Fed rolled out policies that goosed such investments.

The Fed has said Mr. Clarida’s trades were part of a planned portfolio rebalancing, but declined to specify when the planning happened.

Mr. Powell kicked off an internal ethics review last month. A Fed spokesperson said on Monday that an independent government watchdog would carry out an investigation into whether senior officials broke relevant ethics rules or laws.

Article source: https://www.nytimes.com/2021/10/05/business/economy/federal-reserve-jerome-powell-warren.html