Evelyn Reynolds

Recent research underlines the central role that automation has played in widening disparities.Daron Acemoglu, an influential economist at the Massachusetts Institute of Technology, has been making the case against what he describes as “excessive automation.”The economywide payoff of investing in machines and software has been stubbornly elusive. But he says the rising inequality resulting from those investments, and from the public policy that encourages them, is crystal clear.Half or more of the increasing gap in wages among American workers over the last 40 years is attributable to the automation of tasks formerly done by human workers, especially men without college degrees, according to some of his recent research.Globalization and the weakening of unions have played roles. “But the most important factor is automation,” Mr. Acemoglu said. And automation-fueled inequality is “not an act of God or nature,” he added. “It’s the result of choices corporations and we as a society have made about how to use technology.”Mr. Acemoglu, a wide-ranging scholar whose research makes him one of most cited economists in academic journals, is hardly the only prominent economist arguing that computerized machines and software, with a hand from policymakers, have contributed significantly to the yawning gaps in incomes in the United States. Their numbers are growing, and their voices add to the chorus of criticism surrounding the Silicon Valley giants and the unchecked advance of technology.Paul Romer, who won a Nobel in economic science for his work on technological innovation and economic growth, has expressed alarm at the runaway market power and influence of the big tech companies. “Economists taught: ‘It’s the market. There’s nothing we can do,’” he said in an interview last year. “That’s really just so wrong.”Anton Korinek, an economist at the University of Virginia, and Joseph Stiglitz, a Nobel economist at Columbia University, have written a paper, “Steering Technological Progress,” which recommends steps from nudges for entrepreneurs to tax changes to pursue “labor-friendly innovations.”Erik Brynjolfsson, an economist at Stanford, is a technology optimist in general. But in an essay to be published this spring in Daedalus, the journal of the American Academy of Arts and Sciences, he warns of “the Turing trap.” The phrase is a reference to the Turing test, named for Alan Turing, the English pioneer in artificial intelligence, in which the goal is for a computer program to engage in a dialogue so convincingly that it is indistinguishable from a human being.For decades, Mr. Brynjolfsson said, the Turing test — matching human performance — has been the guiding metaphor for technologists, businesspeople and policymakers in thinking about A.I. That leads to A.I. systems that are designed to replace workers rather than enhance their performance. “I think that’s a mistake,” he said.The concerns raised by these economists are getting more attention in Washington at a time when the giant tech companies are already being attacked on several fronts. Officials regularly criticize the companies for not doing enough to protect user privacy and say the companies amplify misinformation. State and federal lawsuits accuse Google and Facebook of violating antitrust laws, and Democrats are trying to rein in the market power of the industry’s biggest companies through new laws.Mr. Acemoglu testified in November before the House Select Committee on Economic Disparity and Fairness in Growth at a hearing on technological innovation, automation and the future of work. The committee, which got underway in June, will hold hearings and gather information for a year and report its findings and recommendations.Despite the partisan gridlock in Congress, Representative Jim Himes, a Connecticut Democrat and the chairman of the committee, is confident the committee can find common ground on some steps to help workers, like increased support for proven job-training programs.“There’s nothing partisan about economic disparity,” Mr. Himes said, referring to the harm to millions of American families regardless of their political views.Representative Jim Himes, who leads a panel on economic disparity, is confident it can find ways to help workers, like increased support for proven job-training programs.Samuel Corum for The New York TimesEconomists point to the postwar years, from 1950 to 1980, as a golden age when technology forged ahead and workers enjoyed rising incomes.But afterward, many workers started falling behind. There was a steady advance of crucial automating technologies — robots and computerized machines on factory floors, and specialized software in offices. To stay ahead, workers required new skills.Yet the technological shift evolved as growth in postsecondary education slowed and companies began spending less on training their workers. “When technology, education and training move together, you get shared prosperity,” said Lawrence Katz, a labor economist at Harvard. “Otherwise, you don’t.”Increasing international trade tended to encourage companies to adopt automation strategies. For example, companies worried by low-cost competition from Japan and later China invested in machines to replace workers.Today, the next wave of technology is artificial intelligence. And Mr. Acemoglu and others say it can be used mainly to assist workers, making them more productive, or to supplant them.Mr. Acemoglu, like some other economists, has altered his view of technology over time. In economic theory, technology is almost a magic ingredient that both increases the size of the economic pie and makes nations richer. He recalled working on a textbook more than a decade ago that included the standard theory. Shortly after, while doing further research, he had second thoughts.“It’s too restrictive a way of thinking,” he said. “I should have been more open-minded.”Mr. Acemoglu is no enemy of technology. Its innovations, he notes, are needed to address society’s biggest challenges, like climate change, and to deliver economic growth and rising living standards. His wife, Asuman Ozdaglar, is the head of the electrical engineering and computer science department at M.I.T.But as Mr. Acemoglu dug deeply into economic and demographic data, the displacement effects of technology became increasingly apparent. “They were greater than I assumed,” he said. “It’s made me less optimistic about the future.”Mr. Acemoglu’s estimate that half or more of the increasing gap in wages in recent decades stemmed from technology was published last year with his frequent collaborator, Pascual Restrepo, an economist at Boston University. The conclusion was based on an analysis of demographic and business data that details the declining share of economic output that goes to workers as wages and the increased spending on machinery and software.Mr. Acemoglu and Mr. Restrepo have published papers on the impact of robots and the adoption of “so-so technologies,” as well as the recent analysis of technology and inequality.So-so technologies replace workers but do not yield big gains in productivity. As examples, Mr. Acemoglu cites self-checkout kiosks in grocery stores and automated customer service over the phone.Today, he sees too much investment in such so-so technologies, which helps explain the sluggish productivity growth in the economy. By contrast, truly significant technologies create new jobs elsewhere, lifting employment and wages.The rise of the auto industry, for example, generated jobs in car dealerships, advertising, accounting and financial services.Market forces have produced technologies that help people do their work rather than replace them. In computing, the examples include databases, spreadsheets, search engines and digital assistants.But Mr. Acemoglu insists that a hands-off, free-market approach is a recipe for widening inequality, with all its attendant social ills. One important policy step, he recommends, is fair tax treatment for human labor. The tax rate on labor, including payroll and federal income tax, is 25 percent. After a series of tax breaks, the current rate on the costs of equipment and software is near zero.Well-designed education and training programs for the jobs of the future, Mr. Acemoglu said, are essential. But he also believes that technology development should be steered in a more “human-friendly direction.” He takes inspiration from the development of renewable energy over the last two decades, which has been helped by government research, production subsidies and social pressure on corporations to reduce carbon emissions.“We need to redirect technology so it works for people,” Mr. Acemoglu said, “not against them.” More

Stores are shortening hours, fitting rooms are being closed and some employees can’t go on break. “Morale could not be lower,” one retail worker said.Long checkout lines. Closed fitting rooms. Empty shelves. Shortened store hours.Plus the dread of contracting the coronavirus and yet another season of skirmishes with customers who refuse to wear masks.A weary retail work force is experiencing the fallout from the latest wave of the pandemic, with a rapidly spreading variant cutting into staffing.While data shows that people infected with the Omicron variant are far less likely to be hospitalized than those with the Delta variant, especially if they are vaccinated, many store workers are dealing with a new jump in illness and exposures, grappling with shifting guidelines around isolation and juggling child care. At the same time, retailers are generally not extending hazard pay as they did earlier in the pandemic and have been loath to adopt vaccine or testing mandates.“We had gotten to a point here where we were comfortable, it wasn’t too bad, and then all of a sudden this new variant came and everybody got sick,” said Artavia Milliam, who works at H&M in Hudson Yards in Manhattan, which is popular with tourists. “It’s been overwhelming, just having to deal with not having enough staff and then twice as many people in the store.”Ms. Milliam, a member of the Retail, Wholesale and Department Store Union, is vaccinated but contracted the virus during the holidays, experiencing mild symptoms. She said that fewer employees were working registers and organizing clothing and that her store had been closing the fitting rooms in the mornings because nobody was available to monitor them.Macy’s said last week that it would shorten store hours nationally on Mondays through Thursdays for the rest of the month. At least 20 Apple Stores have had to close in recent weeks because so many employees had contracted Covid-19 or been exposed to someone who had, and others have curtailed hours or limited in-store access.At a Macy’s in Lynnwood, Wash., Liisa Luick, a longtime sales associate in the men’s department, said, “Every day, we have call-outs, and we have a lot of them.” She said the store had already reduced staff to cut costs in 2020. Now, she is often unable to take breaks and has fielded complaints from customers about a lack of sales help and unstaffed registers.“Morale could not be lower,” said Ms. Luick, who is a steward for the local unit of the United Food and Commercial Workers union. Even though Washington has a mask mandate for indoor public spaces, “we get a lot of pushback, so morale is even lower because there’s so many people who, there’s no easy way to say this, just don’t believe in masking,” she added.Store workers are navigating the changing nature of the virus and trying their best to gauge new risks. Many say that with vaccinations and boosters, they are less fearful for their lives than they were in 2020 — the United Food and Commercial Workers union has tracked more than 200 retail worker deaths since the start of the pandemic — but they remain nervous about catching and spreading the virus.At a Stop & Shop in Oyster Bay, N.Y., Wally Waugh, a front-end manager, said that checkout lines were growing longer and that grocery shelves were not being restocked in a timely manner because so many people were calling in sick with their own positive tests or those of family members.That has forced remaining employees to work more hours. But even with overtime pay, many of his colleagues are not eager to stay in the store longer than they must. Mr. Waugh has started taking off his work clothes in his garage and immediately putting them in the laundry before entering his house — a routine he hadn’t followed since the earliest days of the pandemic.Wally Waugh in his garage, where he changes out of the clothes he wears to work at a Stop & Shop to avoid possibly spreading the coronavirus.Sasha Maslov for The New York Times“People are not nervous like when Covid first started,” said Mr. Waugh, who is a steward for the Retail, Wholesale and Department Store Union. “But we are gravely concerned.”At a QFC grocery store in Seattle, Sam Dancy, a front-end supervisor, said many colleagues were calling out sick. The store, part of a chain owned by Kroger, has closed early several times, and customers are helping to bag their own groceries. There are long lines, and some of the self-checkout lanes are closed because employees aren’t available to oversee them.“Some people are so tired of what’s going on — you have some that are exposed and some that are using it as an excuse to not have to work to be around these circumstances,” said Mr. Dancy, a member of the local food and commercial workers union, who has worked at the chain for 30 years. “I have anxiety till I get home, thinking, ‘Do I have this or not?’ It’s a mental thing that I think a lot of us are enduring.”Shifting guidelines around isolation are also causing confusion at many stores. While H&M has instructed employees like Ms. Milliam to isolate for 14 days after testing positive for Covid-19, Macy’s said in a memo to employees last week that it would adopt new guidance from the Centers for Disease Control and Prevention that recommended shortening isolation for infected people to five days from 10 if they are asymptomatic or their symptoms are resolving.But even if retailers shorten isolation periods, schools and day-care facilities may have longer quarantine periods for exposed families, putting working parents in a bind.Ms. Luick of Macy’s said she felt the guidance was aimed at “constantly trying to get people to work,” and did not make her feel safer.Even as Omicron spreads faster than other variants, employers have not shown a willingness to reinstitute previous precautions or increased pay, said Kevin Schneider, secretary-treasurer of a unit of the United Food and Commercial Workers in the Denver area.Like many retailers, Kroger hasn’t provided hazard pay nationally since the early stages of the pandemic, though the union is negotiating for it to be reinstated. The chain has also discontinued measures like controlling how many customers are allowed in stores at a time. The union has been asking for armed guards at all of its stores in the Denver area as incidents of violence increase.“The company says they are providing a safe environment for workers to do their jobs in,” Mr. Schneider said. “We don’t believe that.”In a statement, a Kroger spokeswoman said, “We have been navigating the Covid-19 pandemic for nearly two years, and, in line with our values, the safety of our associates and customers has remained our top priority.”The company added that frontline employees had each received as much $1,760 in additional pay to “reward and recognize them for their efforts during the pandemic.”Some workers have reached another breaking point. In Jacksonville, Fla., one Apple Store employee organized a brief walkout on Christmas Eve to protest working conditions after he witnessed a customer spitting on his colleague. Dozens of people at other stores also participated.“It was my final straw,” said Daryl Sherman II, who organized the walkout. “Something had to be done.”In some cases, municipalities have stepped in to obtain hazard pay for workers. In Seattle, Kroger has been required to pay grocery store employees like Mr. Dancy an extra $4 an hour based on local legislation.“Some people are so tired of what’s going on,” said Sam Dancy, a front-end supervisor at QFC, a grocery store chain.Grant Hindsley for The New York TimesMore broadly, the staffing shortages have put a new spotlight on a potential vaccine-or-testing mandate from the Biden administration, which major retailers have been resisting. The fear of losing workers appears to be looming large, especially now.While the retail industry initially cited the holiday season rush for its resistance to such rules, it has more recently pointed to the burden of testing unvaccinated workers. After oral arguments in the case on Friday, the Supreme Court’s conservative majority expressed skepticism about whether the Biden administration had legal authority to mandate that large employers require workers to be vaccinated.The National Retail Federation, a major industry lobbying group, said in a statement last week that it “continues to believe that OSHA exceeded its authority in promulgating its vaccine mandate.” The group estimated that the order would require 20 million tests a week nationally, based on external data on unvaccinated workers, and that “such testing capacity currently does not exist.”When the top managers at Mr. Waugh’s Stop & Shop store began asking employees whether they were vaccinated in preparation for the federal vaccine mandates that could soon take effect, he said, a large number expressed concern to him about being asked to disclose that information.“It was concerning to see that so many people were distressed,” he said, though all of the employees complied.Ms. Luick of Macy’s near Seattle said that she worked with several vocal opponents of the Covid-19 vaccines and that she anticipated that at least some of her colleagues would resign if they were asked to provide vaccination status or proof of negative tests.Macy’s told employees last week that it would adopt new guidance from the C.D.C. that recommended shortening isolation periods.Jeenah Moon for The New York TimesStill, Macy’s was among major employers that started asking employees for their vaccination status last week ahead of the Supreme Court hearing on Friday and said it might require proof of negative tests beginning on Feb. 16.“Our primary focus at this stage is preparing our members for an eventual mandate to ensure they have the information and tools they need to manage their work force and meet the needs of their customers,” said Brian Dodge, president of the Retail Industry Leaders Association, which includes companies like Macy’s, Target, Home Depot, Gap and Walmart.As seasonal Covid-19 surges become the norm, unions and companies are looking for consistent policies. Jim Araby, director of strategic campaigns for the food and commercial workers union in Northern California, said the retail industry needed to put in place more sustainable supports for workers who got ill.For example, he said, a trust fund jointly administered by the union and several employers could no longer offer Covid-related sick days for union members.“We have to start treating this as endemic,” Mr. Araby said. “And figuring out what are the structural issues we have to put forward to deal with this.”Kellen Browning contributed reporting. More

Researchers say the human concepts of intergenerational wealth and inequality are useful for studying some animals’ behavior.Some North American red squirrels are born with a silver spoon in their mouths. They live in pine forests where the adults defend caches of food. Without a cache of their own, many baby squirrels won’t survive the winter. But each year, some squirrel mothers abandon their territory, bequeathing all their food to one or more babies who stay behind. These young squirrels are much more likely to survive until the spring.Across the animal kingdom, there are other examples of species that share resources such as territory, tools and shelter between generations. In a paper published last month in Behavioral Ecology, a trio of researchers argue that we should call this phenomenon the same thing we call it in humans: intergenerational wealth.Those young, pine-cone-rich squirrels, the scientists say, are children of privilege. When George Orwell wrote in “Animal Farm” that some animals were more equal than others, he was trying to shed light on the human ideological conflicts of the time. The researchers hope to use the analogy in the opposite direction. Applying a human lens, they say, can help us understand the roots of inequality in animals.Jennifer Smith, a behavioral ecologist at Mills College in Oakland, Calif., said the idea for the paper arose early in the pandemic, in conversations that she and colleagues at the University of California, Los Angeles, had over (of course) Zoom. They saw how Covid-19 was highlighting health disparities and other inequalities around the world. The scientists began to wonder if they could learn more about inequality by studying it in animals.“When we started looking for it, we found lots and lots of examples,” Dr. Smith said.Young red grouse are more likely to succeed in establishing their own territories when their fathers and other kin are nearby. Hyena daughters born to high-ranking mothers inherit their status, and get dibs on fresh meat. Some chimpanzees and capuchin monkeys crack nuts using stone tools that their parents used before them.Animal wealth may be passed down to nonrelatives, too, as in paper wasps that take over shared nests or hermit crabs that seek better real estate.Some capuchin monkeys crack nuts using stone tools that their parents used before them.T. Milse/Juniors Bildarchiv GmbH, via AlamyTo study wealth transfers between animals, scientists can ask concrete questions: Does a lizard that lives with its parents survive longer? Does a monkey with access to larger nut-cracking rocks go on to have more children and grandchildren? Biologists can explore animal privilege without tackling all of the topic’s cultural complexities in humans.By seeking similarities between privilege in people and animals, Dr. Smith hopes to unlock a greater understanding of inequality in the natural world. “For me, it’s very exciting to study the rules of inequality in nonhuman animals,” she said. “To see this across so many different species was quite surprising. And we’re just touching the surface.”Next, she’s planning to expand her survey, looking at wealth and privilege across thousands more animal species.“The use of terms like ‘privilege’ and ‘perpetuating the cycle of privilege’ is a little bit unusual” in animal research, said Jenny Tung, an evolutionary anthropologist and geneticist at Duke University who focuses on how social factors affect health in primates. “In part because they’re a bit loaded for us as humans to read.” But she thinks the idea of using a human lens to look at how animals pass down resources has promise.“That is potentially tremendously useful,” Dr. Tung said. The idea “opens up a whole tool chest of ways to understand” where inequality comes from among animals, she said.Siobhán Mattison, an evolutionary anthropologist at the University of New Mexico who has studied inequality in human societies, also thinks that combining the anthropology of privilege with animal biology has potential. “Humans are animals,” she said. “We are undoubtedly influenced by some of the same things that drive inequality in other animals.”That doesn’t mean animals can answer every question about how inequality arises in humans, Dr. Mattison added: “Humans are vastly more cooperative than most other species.” Our cultural institutions can reinforce inequality, she said, but they can also fight against it.Although Dr. Smith is primarily hoping that insights from humans can teach her more about inequality in animals, she does think the science could work in the opposite direction too. Some of the rules scientists discover in animals might apply to humans.She stresses, though, that finding inequality in nature isn’t the same as justifying it. Her research “could be misinterpreted as saying, ‘Well, it exists everywhere, so we can do nothing about it,’” Dr. Smith said.Unlike other animals, “We’re able to understand this phenomenon,” Dr. Smith said, “and then explicitly act to choose how we use that knowledge to create social change.” More

Richard H. Clarida, the Federal Reserve’s vice chair, announced on Monday that he would resign from his position two weeks earlier than planned. While he did not give a reason, he had faced renewed scrutiny about trades he made in 2020 as the central bank was poised to rescue financial markets.“With my statutory term as governor due to expire on Jan. 31, 2022, I am writing to inform you that it is my intention to resign from the board on Jan. 14, 2022,” Mr. Clarida wrote in a letter to President Biden that the Fed released Monday.The New York Times reported last week that Mr. Clarida had corrected his 2020 financial disclosures in late December. Ethics experts said one of his updated trades raised questions — he sold a stock fund on Feb. 24 before repurchasing it on Feb. 27, just before the chair of the Fed announced on Feb. 28 that the central bank stood ready to help markets and the economy.His initial disclosures had noted only the purchase of the stock fund, which the Fed had described on his behalf as a planned portfolio rebalancing. But the rapid move out of and back into stocks called that explanation into question, some experts said, and the repurchase could have put Mr. Clarida in a position to benefit as the Fed reassured markets.Neither the Fed nor Mr. Clarida provided an new explanation for the trades, though the Fed’s ethics office noted in the updated filing that they still appeared to be in compliance with conflict-of-interest laws.Mr. Clarida’s updated disclosure drew widespread media coverage and lawmaker attention. Senator Elizabeth Warren, Democrat of Massachusetts, called on the Fed on Monday to release more information about trades by top Fed officials in light of the news.The amended disclosure and volley of attention came at an inopportune moment for Jerome H. Powell, the Fed chair, who has been renominated to his position by Mr. Biden. He is scheduled to appear on Tuesday at a confirmation hearing before the Senate Banking Committee.Ms. Warren sits on the Banking Committee, so Mr. Powell is still almost sure to face questions about why some Fed officials traded so actively as markets gyrated and the Fed staged a huge rescue at the start of the pandemic.“The whole rebalancing story, that just collapses in the face of the fact that he sold and then bought,” said Simon Johnson, an economist at the Massachusetts Institute of Technology. “If you are Chair Powell, you don’t want to have your reconfirmation hearing focused on this.”Mr. Powell and his colleagues have in recent months revamped the central bank’s ethics guidelines — in October releasing plans to overhaul them and prevent many types of financial activity, including trading during times of turmoil. He may point to that as a sign of how seriously the Fed has taken the issue.Mr. Clarida’s resignation is the latest development in a monthslong trading scandal that has embroiled top officials and prompted high-profile departures at the Fed.Financial disclosures released in late 2021 showed that Robert S. Kaplan, the former president of the Federal Reserve Bank of Dallas, had made big individual-stock trades, while Eric S. Rosengren, the former Boston Fed president, had traded in real estate securities. Those moves drew immediate and intense backlash from lawmakers, ethics experts and former Fed employees.Fed officials were actively rescuing a broad swath of markets in 2020. In March and April, they slashed rates to zero, bought mortgage-tied and government bonds in mass quantities, and rolled out rescue programs for corporate and municipal debt.The concern is that continuing to deal in affected securities for their own portfolios throughout the year could have given officials room to profit from their privileged knowledge.Mr. Kaplan resigned in September, citing the scandal; Mr. Rosengren resigned simultaneously, citing health issues.Mr. Clarida’s term was scheduled to end at the close of this month because his seat as governor was expiring. Bloomberg News first reported on his stock fund purchase — what was visible before he corrected the disclosure — in October.While Mr. Clarida didn’t address the trading issues in his resignation letter, he did mention them indirectly during a speech late last year.“I’ve always acquitted myself honorably and with integrity with respect to the obligations of public service,” he said in mid-October.The Fed’s government watchdog is investigating the trades officials made in 2020, and Ms. Warren has called for an investigation by the Securities and Exchange Commission. The S.E.C. does not comment on whether such investigations are underway.Mr. Clarida has been vice chair since 2018, and during that time has been a close collaborator of Mr. Powell’s and a valuable second-in-command. His speeches were closely watched by Wall Street for the policy signals they often offered, and he was lauded for his skills as a clear and careful communicator.He also led a push to revamp the Fed’s policy-setting framework to make it more focused on employment and more fitted to the challenges of the modern economic era, one of the major hallmarks of Mr. Powell’s first term.“I will miss his wise counsel and vital insights,” Mr. Powell said in a statement announcing Mr. Clarida’s early departure. More

Jerome H. Powell, the Federal Reserve chair whom President Biden has nominated for a second four-year term, is set to tell senators on Tuesday that central bankers will use their economic tools to keep inflation — which has been high — from becoming entrenched.Mr. Powell, who is scheduled to testify before the Senate Banking Committee as he seeks confirmation, faces reappointment at an anxious economic moment. Inflation is running at the fastest pace in nearly 40 years. While economists have hoped for months that it would soon fade, that has yet to happen. Higher prices are chipping away at household incomes, even as wages rise and as companies hire at a solid clip.“We know that high inflation exacts a toll, particularly for those less able to meet the higher costs of essentials like food, housing and transportation,” Mr. Powell will tell lawmakers, according to his prepared remarks. “We are strongly committed to achieving our statutory goals of maximum employment and price stability.”Mr. Powell and his colleagues in recent months have reoriented their policies to pull back on support for the economy in light of the inflationary burst. They are slowing a large bond-buying program they had been using to keep longer-term borrowing cheap and to stoke the economy, and they could raise interest rates as soon as March.“Monetary policy must take a broad and forward-looking view, keeping pace with an ever-evolving economy,” Mr. Powell will tell senators.Economists increasingly expect Fed officials to make three or even four increases this year and eventually to shrink the size of their bond holdings, policies that together will make borrowing more expensive for households and businesses, take juice out of the stock market and slow overall growth.The pivot — which squarely puts the Fed in inflation-fighting mode — could assuage some lawmakers who are worried that the central bank is going to allow inflation to jump out of control. Even so, some may worry what has taken monetary policymakers so long.Others may ask whether the central bank risks overdoing it. Removing support for the economy could slow the job market and curtail hiring while virus concerns and child care issues are keeping many former workers on the labor market’s sidelines.Mr. Powell most likely will also need to address a trading scandal that has rocked the Fed in recent months. Several prominent central bankers traded financial assets for their own portfolios in early 2020, when the Fed was very active in rescuing markets.One, Richard H. Clarida, the vice chair, recently corrected his financial disclosures in a way that made his hot-button transaction — a move into stocks that took place on the eve of a big Fed announcement — look less like the rebalancing that the Fed originally said it had been and more like a response to market conditions.Mr. Clarida announced on Monday that he would resign earlier than planned from the Fed.Mr. Powell did not address that development directly in the prepared remarks, but he pledged to be fair and independent in policy choices.“I am committed to making those decisions with objectivity, integrity and impartiality, based on the best available evidence and in the longstanding tradition of monetary policy independence,” he will say. More

Federal Reserve Vice Chairman Richard Clarida said Monday he will be leaving his post Friday, shortly before his term would have been expired.
The resignation comes following more questions into stock fund trades for Clarida in February 2020.

Federal Reserve Vice Chairman Richard Clarida said Monday he will be leaving his post with just a few weeks left on his term and amid revelations regarding his trading of stock funds.
In an announcement released Monday afternoon, Clarida said he will be stepping down from his post this Friday. His term expires on Jan. 31.

The move comes following additional disclosures regarding trades Clarida made in February 2020, around the time when the Fed was getting ready to roll out what eventually would become its most aggressive policy tools ever, in an effort to combat the Covid crisis.
“Rich’s contributions to our 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,” Fed Chairman Jerome H. Powell said in a statement. “I will miss his wise counsel and vital insights.”
Clarida’s exit comes amid heightened scrutiny over what he had described as pre-planned portfolio rebalancing on Feb. 27, 2020. However, recent disclosures, first reported by the New York Times, showed that three days earlier, Clarida sold shares in three stock funds that he would repurchase on the 27th.
Markets dropped on Feb. 24 amid worries that the spreading coronavirus could cause substantial economic damage. On Feb. 26, Fed policymakers huddled to discuss what policy moves they might take to combat what eventually would become a full-blown pandemic.
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’s announcement did not mention anything about the controversy, which has been a focal point of Fed criticism from Sen. Elizabeth Warren (D-Massachusetts) and some other lawmakers. Two regional Fed presidents, Eric Rosengren of Boston and Robert Kaplan of Dallas, both resigned following questions over their trading activities.
Clarida called serving on the Fed “a distinct honor and immense privilege” and noted the measures it took during the pandemic.
“I am proud to have served with my Federal Reserve colleagues as we, in a matter of weeks, put in place historic policy measures that, in conjunction with fiscal policy, steered the economy away from depression and that have supported a robust recovery in economic activity and employment since,” he said in a resignation letter to President Joe Biden. “There is still road left to walk and damage to be repaired.”
The resignation comes the same week Powell appears before a Senate committee for his confirmation hearing to a second term. That hearing will happen Tuesday. Two days later, Fed Governor Lael Brainard will face a hearing to be confirmed as vice chairman to take Clarida’s spot.

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Senator Elizabeth Warren, the Massachusetts Democrat, pressed the central bank to provide more information by next Monday.Senator Elizabeth Warren, Democrat of Massachusetts, asked the Federal Reserve in a letter sent Monday to release more information about a series of financial trades that several top officials made in 2020, when the Fed was actively propping up markets.The Fed has become embroiled in a scandal over the transactions, which occurred in the months around its no-holds-barred market rescue at the outset of the pandemic, raising the possibility that policymakers could have financially benefited from the information they held and the decisions they were making. Jerome H. Powell, the Fed chair, has acknowledged that the trades were a problem and acted quickly to overhaul the central bank’s ethics rules.But that has not stemmed the fallout. Mr. Powell, who was nominated for a second term as chair by President Biden, will almost surely face questions about the Fed’s ethics dilemma at his confirmation hearing on Tuesday before the Senate Banking Committee. Ms. Warren, who sits on that committee, is pushing for more details about Fed trading activity and new ethics rules, according to the new letter, which she sent to Mr. Powell. Ms. Warren, who previously requested that the Fed turn over information and documents surrounding the trades, is asking the Fed to “release all available information about the trades” by next Monday.Ms. Warren said in her letter that the central bank had failed to fully respond to her previous requests for information.Ms. Warren, who has criticized Mr. Powell’s tenure as chair, has said she will not support his renomination.Scrutiny of the 2020 trades has intensified after The New York Times reported last week that Richard H. Clarida, the Fed’s vice chair, failed to initially disclose the full extent of his trading in his original financial disclosure. Mr. Clarida amended his disclosures in late December, and the document showed that he had moved out of a stock fund as the markets were plunging during the pandemic. Three days later, he moved back into the same fund, just before Mr. Powell announced that the central bank stood ready to rescue markets.Ethics experts said the new information called into question the central bank’s original explanation that Mr. Clarida’s transaction was a preplanned rebalancing away from bonds and toward stocks, and said more information was needed to understand the trades.The new information “raises suspicions that the Fed may be failing to disclose the full scope of the scandal to the public,” Ms. Warren wrote. “I therefore ask that you respond in full to my request by January 17, 2022.”Mr. Clarida updated his disclosures after noticing “inadvertent errors,” a Fed representative said last week, and the Fed’s ethics officer said the newly noted trades were “in compliance with applicable laws and regulations governing conflicts of interest.” Still, they have drawn scrutiny because the rapid move out of and back into a stock fund at a time of market tumult looked less like a rebalancing toward stocks and more like a possible response to market conditions.“This revelation is just the latest evidence of a deep-rooted ethics failure at the Fed and the urgent need for a comprehensive information release about officials’ trading activity,” Ms. Warren wrote. More