Fed chairmen Rosengren and Kaplan to retire amid stock market controversy

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Eric Rosengren

Andrew Harrer / Bloomberg

The presidents of the Federal Reserve Banks in Dallas and Boston will step down. Their departures come amid a backlash after the two presidents revealed that they had actively traded shares in 2020.

Dallas Fed President and CEO Rob Kaplan will retire from the bank effective October 8. Kaplan said his “financial disclosure risked becoming a distraction from the performance of vital work by the Federal Reserve.”

Boston Fed Chairman Eric Rosengren plans to retire at the end of September citing a health problem, the bank said on Monday. Rosengren was scheduled to retire in June 2022 in accordance with the Fed’s mandatory retirement limit. He said he pushed back the dates to deal with worsening kidney conditions and postponing his need for kidney dialysis. He qualified for a kidney transplant in June 2020, he added.

“It became clear that I should aim to reduce my stress so that I could focus on my health issues,” Rosengren wrote in a letter to Federal Reserve Chairman Jerome Powell.

Kaplan and Rosengren have previously said their actions comply with their bank’s codes of conduct and have promised to sell their shares by the end of the month to avoid giving the impression that their transactions conflict with their responsibilities in matters. policy development.

Since the report, Powell has called for a full review of the ethical rules governing the personal financial activities of senior central bank officials. Senator Elizabeth Warren (D., Mass.), Called on the Federal Reserve’s 12 regional banks to restrict their management teams from individual stock trading.

“We fully understand that the trust of the American people is essential to enable us to carry out our mission, and that is why I have asked the Fed to begin a comprehensive review of the ethics rules regarding assets and activities. authorized by Fed officials, “Powell said at a press conference after a Fed policy meeting.

Kaplan has served as chairman and chief executive officer of the Dallas central bank for the past six years. The bank said it helped increase the Dallas Fed’s impact on the Federal Reserve system, particularly in the area of ​​thought leadership in economic matters. First Vice-President Meredith Black will delay her retirement to serve as Interim President during the transition.

Rosengren worked at the Boston Central Bank for over 35 years, becoming the 13th Chairman of the Boston Fed in 2007. He led the bank through the 2008-2009 recession and the 2020 pandemic, supporting the financial system and creating emergency lending facilities, the bank said. . Rosengren has also been involved in the development of various technology and cybersecurity initiatives, such as the FedNow instant payments system and the exploration of the creation of a central bank digital currency.

Kenneth C. Montgomery, who is currently the bank’s senior vice president and chief operating officer, will lead the bank when Rosengren steps down. A search committee for a new chairman was already well underway due to Rosengren’s planned retirement in 2022, the bank said.

Barron editors contributed to this article

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