DALLAS–The presidents of two Federal Reserve banks have announced plans to exit their positions following controversy related to their trading securities that could have benefited from the central bank’s 2020 intervention in financial markets.
Federal Reserve Bank of Dallas President Robert S. Kaplan said he will retire on Oct. 8. In a statement announcing his exit, Kaplan acknowledged the controversy as the reason for his departure.
Separately, Eric S. Rosengren, the president of the Boston Fed, said he is retiring nine months early and will leave the bank on Sept. 30. In his statement, Rosengren cited health reasons related to a kidney condition for the early departure.
The resignations followed the Fed’s announcement this month that Chair Jerome H. Powell had ordered a review of the central bank’s ethics rules in light of the concern surrounding the trades, MSNBC reported.
Powell Expresses Displeasure
When asked about his confidence in Kaplan and Rosengren during a news conference last week, Powell expressed displeasure with what had happened.
“No one on the F.O.M.C. is happy to be in this situation, to be having these questions raised,” Powell said, referring to the policy-setting Federal Open Market Committee, according to MSNBC. “This is an important moment for the Fed and I’m determined that we will rise to the moment.”
Kaplan said in his statement that it was his decision to leave the Fed, and that “the recent focus on my financial disclosure risks becoming a distraction” to the central bank’s economic work.
Buying, Selling Millions in Stocks
MSNBC noted Kaplan drew scrutiny for buying and selling millions of dollars in individual stocks, among other investments, last year — trading first reported on by The Wall Street Journal on Sept. 7. He has maintained that his trades were consistent with Fed ethics rules.
The Boston Fed’s Rosengen came under criticism because he held stakes in real estate investment trusts, which invest in and sometimes manage properties, and listed purchases and sales in those in 2020, reported MSNBC, noting he spent last year warning publicly about risks in the commercial real estate market, and was helping to set Fed policy on mortgage-backed security purchases, which can help the housing market by improving financing conditions.