2 senior Fed officials resign after trading backlash
Following the controversy, Fed Chairman Jerome Powell pledged to tighten central bank ethics rules.
In announcing his resignation, Kaplan said he “adheres to all of the Federal Reserve’s ethical standards and policies,” but added that he was leaving because “the recent emphasis on my financial disclosure may become a distraction. “for the political work of the Fed.
Rosengren, who also said his transactions complied with Fed rules, told staff he qualified for the kidney transplant list last year “due to worsening disease kidney disease that he had for many years, “according to a Boston Fed press release.
“Delaying the need for dialysis could be improved if he now changes his lifestyle to reduce the risks of his condition,” the statement added.
Due to the quasi-private structure of the Fed’s regional banks, their chairmen are not required to disclose their financial transactions to the Office of Government Ethics, unlike Powell and other members of the Fed’s board of directors based in Washington. The 12 banks prepare annual declarations which they publish voluntarily.
Kaplan is one of the Fed officials most inclined to raise interest rates as soon as possible, saying the economy could reach full employment as early as next year.
Rosengren, who has headed the Boston Fed since 2007, has been a leading warning about the potential risks to the financial system posed by low interest rates, which can increase investors’ motivation to make riskier bets for higher returns. students.
He will be 65 next June, an age when presidents of reserve banks are generally required to retire. Whoever takes his seat will be a voting member of the Fed’s interest rate setting committee in 2022. With his already planning to retire, plans for a research process are “well underway,” according to him. the Boston Fed press release.
Rosengren’s departure comes at a time when the Boston Fed is working with the Massachusetts Institute of Technology to develop technology that could underpin a possible central bank digital currency, and the first phase of that work could be completed this fall. .
Powell, who testified alongside Treasury Secretary Janet Yellen before the Senate Banking Committee on Tuesday, praised both men.
“Eric has distinguished himself time and time again in more than three decades of dedicated public service with the Federal Reserve,” Powell said of Rosengren in the Boston Fed statement. “He led the Fed’s work in managing several emergency lending facilities during two distinct periods of economic crisis. In addition to his knowledge of monetary policy, Eric has focused tirelessly on how best to ensure the stability of the financial system. “
He also said he was grateful for Kaplan’s six years of service as head of the Dallas Fed. “He has been a passionate and energetic public voice on a wide range of issues, including the critical value of early childhood education and literacy,” Powell said of Kaplan. “In addition, he strengthened the Bank’s economic research and played a very constructive role in the system-wide management, budget and technology efforts.