Home Commercial trading Kaplan and Rosengren, Fed chairmen under fire, to step down

Kaplan and Rosengren, Fed chairmen under fire, to step down



Two Federal Reserve officials who were recently criticized for trading in securities in 2020, as the central bank was active in saving financial markets from the pandemic crisis, announced on Monday that they would be stepping down.

Robert S. Kaplan, who heads the Dallas Federal Reserve, will retire on Oct. 8, according to a statement released Monday afternoon. Last year, Kaplan gained attention by buying and selling millions of dollars of individual stocks, among other investments.

Mr. Kaplan made direct reference to the controversy in his decision to retire.

Unfortunately, the recent emphasis on my financial disclosure risks becoming a distraction from the Federal Reserve’s performance of ‘its’ vital work,’ he said in the statement. It also noted that its “securities investment activities and disclosures followed bank compliance rules and standards.”

Eric S. Rosengren, who is Chairman of the Boston Federal Reserve, will retire on Thursday, he said in a press release earlier Monday. He said he was retiring earlier than planned to try to prevent kidney disease from worsening, to avoid dialysis.

Mr. Rosengren of holdings held in real estate investment trusts and the listed purchases and sales therein, at a time when he was publicly warning of the risks of the commercial real estate market and helping to shape policy on purchases of mortgage-backed securities .

The two presidents had previously announced that they would convert their financial assets into general indices and cash by September 30.

Jerome H. Powell, the chairman of the Fed, offered statements of support to the two officials in the press releases announcing their exit. Nonetheless, he made it clear at a press conference last week that the Fed took last year’s financial activity seriously, and he ordered a review of the central bank’s ethics rules shortly. time after the announcement of financial activity.

“No one in the FOMC is happy to be in this situation, to have these issues raised,” said Powell, referring to the Federal Open Market Committee responsible for policy development. “This is an important time for the Fed and I am determined that we are up to it.”

The Better Markets Watch Group had called for the Fed to fire the two presidents if they don’t resign.

Mr. Rosengren has served as Chairman of the Boston Fed since 2007, and his retirement was previously scheduled for June. The 12 regional Fed members alternate between voting seats and Mr Rosengren would have had a vote on monetary policy next year. Mr Kaplan would have voted in 2023.

Kenneth C. Montgomery, the first vice-president of the Boston Fed, will be the interim president of this bank. Boston Fed board members, with the exception of bank representatives, will need to select a permanent chairman, subject to the approval of the Fed’s board of governors in Washington.

A longtime Fed employee who worked in research and banking supervision before becoming president, Rosengren was instrumental in responding to the 2020 crisis. His regional Fed managed both the common fund money market investment and the Main Street loan support programs the Fed rolled out last year.

The Boston Fed noted in the statement that Rosengren hoped his health improved and that he would be able to “explore areas of professional interest” in the future.

In Dallas, Meredith Black, the bank’s senior vice president, will serve as interim president until a successor is appointed.