Presidents of the Federal Reserve banks of Boston and Dallas are stepping down, after recent reports of potentially unethical investments in 2020 drew criticism and prompted the Fed to launch an ethics review.
Robert Kaplan of Dallas followed Eric Rosengren of Boston in announcing an early retirement on Monday. Both executives are 64, a year short of the mandatory retirement age at the Fed.
Rosengren said he would retire on Thursday, rather than in July 2022, citing health reasons – an upcoming kidney transplant to help him deal with a chronic condition, specifically. Kaplan will also retire effective October 8, because “the recent focus on my financial disclosure risks becoming a distraction” to the “vital” work of deliberating future monetary policy at “a critical point in our economic recovery,” he said.
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The early retirements come following last week’s disclosures that Kaplan traded stocks of Amazon, Facebook and Johnson & Johnson – among others – in 2020, even while the Fed’s measures to deal with the economic fallout of the coronavirus pandemic boosted their profits and shares. Rosengren, meanwhile, invested in real estate trusts that dealt with mortgage-backed bonds the Fed was buying up to influence borrowing rates.
Fed chair Jerome Powell said the trades were technically legal under existing rules, but vowed to tighten ethics regulations in order to ensure the credibility of the Federal Reserve, the quasi-private institution that functions as the de facto central bank of the US.
The Fed has 12 regional banks and their presidents serve on the Federal Open Market Committee, with a rotating vote every three years. Rosengren was scheduled to be a voting member of the FOMC in 2022.
Today, something very rare happened: 2 Federal Reserve leaders “retired” early.
This happened largely b/c @michaelsderby of the WSJ put a big spotlight on the personal trades the Dallas and Boston Fed presidents did in 2020. Other stories soon followed.
Journalism matters. pic.twitter.com/P35Ek6oIWn
— Heather Long (@byHeatherLong) September 27, 2021
Journalists hastened to claim credit for the highly unusual departure of two regional bank chairs, with a Washington Post economics correspondent citing the work of her colleague at the Wall Street Journal as key to this turn of events.
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