Federal Reserve Bank of Dallas President Robert Kaplan announced his retirement from the central bank just hours after another top official at the central bank announced he was stepping down amid controversy over personal trades they made while on the job.
Kaplan, a former Goldman Sachs executive, announced his resignation on Monday, citing fallout from a series of trades he made last year while the Fed embarked upon an expansive asset-buying program. The resignation comes the same day that Federal Reserve Bank of Boston President Eric Rosengren, who was also facing public scrutiny, announced his retirement for health reasons.
“The Federal Reserve is approaching a critical point in our economic recovery as it deliberates the future path of monetary policy,” Kaplan said in a statement. “Unfortunately, the recent focus on my financial disclosure risks becoming a distraction to the Federal Reserve’s execution of that vital work.”
Kaplan reiterated that his personal trades did not violate Fed policies or the central bank’s ethical standards. His retirement from the central bank is effective on Oct. 8, and Rosengren will be departing the Fed on Friday.
BOSTON FED PRESIDENT ANNOUNCES RETIREMENT AMID TRADING CONTROVERSY
Greg Armstrong, the chairman of the Board of Directors of the Dallas Fed, and deputy chairman Thomas Falk praised Kaplan’s six-year tenure as president and said his departure was done to “eliminate any distractions” to the Fed system.
“So, while the Board of the Dallas Fed understands Rob’s motivation to put the Federal Reserve System above any personal considerations, we accept his retirement with deep regret and believe the nation and the Eleventh District will feel the impact of the loss of his leadership,” they said, speaking with the unanimous endorsement of the board.
Earlier this month, disclosures revealed that Kaplan executed high-value trades in large corporations such as Apple and Amazon.
The individual security holdings prompted Fed Chairman Jerome Powell to call for changes to the Fed’s rules during a press briefing last week. Powell said that the Fed has begun a “comprehensive review of the ethics rules around permissible financial holdings and activity by Fed officials.”
“We need to make changes, and we’re going to do that as a consequence of this,” the chairman said on Wednesday.
Powell praised Kaplan’s tenure in a statement announcing his retirement.
“He has been a passionate and forceful public voice on a wide range of issues, including the critical value of early childhood education and literacy,” Powell said. “In addition, he strengthened the Bank’s economic research and played a very constructive role in Systemwide management, budget and technology efforts. We wish him well.”
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Rosengren was also snarled in the trading controversy, but the news release announcing his retirement did not mention that. Rather, he said that he decided to step down in light of long-running kidney issues.
In addition to previously denying any impropriety, both Kaplan and Rosengren had said they would be selling their individual security holdings and would rather hold those funds in broad indexes and cash instead.
