Another senior Fed official to retire following trade activity


WASHINGTON – Robert Kaplan will step down as chairman of the Federal Reserve Bank of Dallas early next month, the Dallas Fed said on Monday. Kaplan, 64, became the second senior Fed official to announce his resignation after ethical questions were raised this month about their business activities in financial markets.

Kaplan’s resignation follows a similar announcement made earlier Monday by Boston Fed Chairman Eric Rosengren. The two officials’ financial disclosures drew criticism from government watchdogs after revealing large stock transactions in 2020, when the Fed was spending billions of dollars to stabilize financial markets and stimulate the economy. As a result of their trade, the two officials could potentially have benefited from the Fed’s actions.

While Rosengren and Kaplan’s investments were permitted under Fed rules, they have at least raised the appearance of conflicts of interest, which Fed policy discourages. Senator Elizabeth Warren, a Democrat from Massachusetts, sharply criticized the deals and urged Fed Chairman Jerome Powell to ban stock ownership by Fed officials.

“The Federal Reserve is approaching a critical point in our economic recovery as it deliberates on the future direction of monetary policy,” Kaplan said in a statement. “Unfortunately, the recent emphasis on my financial disclosure may become a distraction.” Kaplan announced he would resign on October 8.

Kaplan traded at least $ 1 million in 22 stocks and index funds last year, including Amazon, Chevron, Facebook, and Johnson & Johnson.

Rosengren had invested in funds that held mortgage-backed bonds, the same type the Fed bought for hundreds of billions of dollars this year.

Rosengren said earlier on Monday that he was retiring this week for health reasons. He became eligible for a kidney transplant last year and said the stress of working at the Fed during the pandemic recession worsened his health.

“It became clear that I should aim to reduce my stress so that I could focus on my health issues,” Rosengren said in a written statement.

Rosengren and Kaplan, like the 12 chairmen of the Fed’s regional banks, are members of the Federal Reserve’s policy-making committee, with votes rotating roughly every three years. Neither have had votes this year, but they have contributed to the Fed’s interest rate projections, which last week showed the Fed considering raising its short-term rate, currently close to zero, by the end of 2022.

Both are also seen as relatively “hawkish” policymakers, meaning they often favor higher interest rates to counter inflation.

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