Two regional presidents of the Federal Reserve Bank announced their resignations on Monday.
Boston Fed President Eric Rosengren said in a press release that he will be leaving on 30 September, citing health concerns. Rosengren had originally planned to retire in June 2022.
Dallas Fed President Rob Kaplan also said in a separate press release that he is leaving the bank on 8 October because his financial disclosures are a “distraction” to the Federal Reserve at a “critical point in our economic recovery.”
Both men were embroiled in a recent share trading controversy. A report by the Wall Street Journal alleges that the men made multiple million-dollar trades in shares of Apple, Tesla, and Alibaba, among others, while overseeing US economic policy.
The resignations come on the day before Federal Bank Chairman Jerome Powell is scheduled to testify before the Senate Banking Committee about the central bank’s efforts to combat the economic fallout of Covid-19.
In his resignation letter, Kaplan instated he did nothing wrong.
“During my tenure, I have adhered to all Federal Reserve ethical standards and policies. My securities investing activities and disclosures met Bank compliance rules and standards,” Kaplan’s resignation letter reads.
Powell described Kaplan as a “passionate and forceful public voice on a wide range of issues” in a statement.
“He strengthened the Bank’s economic research and played a very constructive role in systemwide management, budget and technology efforts. We wish him well,” Powell said.
In his resignation letter to Powell, Rosengren disclosed that he qualified for a kidney transplant in June of last year. Rosengren added that he would need to make “lifestyle changes” and start dialysis treatment.
“It has been an honor to serve at the Federal Reserve System, in a job where one can be constantly engaged in pursuing the economic and financial well-being of the country and New England,” Rosengren said in a statement. “I know that my colleagues will build on our progress, and continue making a difference for the public we serve.”
Rosengren was named the 13th President of the Boston Fed in June 2007 and thus worked to expand the bank’s reach to low-to-moderate income families. Some efforts include hosting foreclosure workshops during the Great Recession and leading the Fed’s “Racism and the Economy” forums.
Powell said in a statement that “Rosengren distinguished himself as a leader through more than three decades of public service and his efforts to lead the country through two economic crises.
“In addition to his monetary policy insights, Eric brought a relentless focus on how best to ensure the stability of the financial system. My colleagues and I will miss him,” Powell said.
Public trust essential
Chaiman Powell addressed the trading allegations during a press conference last week, saying the Fed “understand(s) very well that the trust of the American people is essential for us to effectively carry out our mission.”
He also said he has directed the Fed to conduct a review of its ethics rules regarding financial holdings.
“We need to make changes, and we're going to do that as a consequence of this. This will be a throughgoing and comprehensive review. We're going to gather all the facts and look at ways to further tighten our rules and standards,” Powell said.