Two senior Federal Reserve officials who recently drew intense criticism for their stock trading will retire in the coming week, they announced Monday, although only one mentioned the controversy.
Dallas Fed bank Robert Kaplan said he will leave his post on October 8, while Eric Rosengren, who leads the Boston Fed, moved his already-scheduled retirement up by several months to September 30.
The two officials engaged in large stock trades in 2020, at a time when the Federal Reserve was aggressively acting to support the US economy amid the impact of the Covid-19 pandemic, according to financial disclosures first reported by The Wall Street Journal.
While Fed chair Jerome Powell stressed that the officials had not violated any existing rules, he nonetheless announced plans to review the ethics rules regarding investing.
In announcing his retirement after six years at Dallas Fed, Kaplan noted that the US central bank is "approaching a critical point in our economic recovery as it deliberates the future path of monetary policy."
"Unfortunately, the recent focus on my financial disclosure risks becoming a distraction to the Federal Reserve's execution of that vital work," he said in a statement.
In contrast, Rosengren, who served as president of the Boston Fed for 14 years and a total of 35 years with the bank, pointed to health issues and a likely kidney transplant as the reason for accelerating his departure, and did not mention the controversy.
"It has become clear that I should aim to reduce my stress so that I can focus on my health issues," he said.
Kaplan was due to retire in June, when he will hit the Fed's mandatory retirement age of 65.
Powell praised the work of both officials, pointing to Rosengren's "relentless focus" on financial stability, and Kaplan's "passionate and forceful public voice."
But in a press briefing last week, Powell acknowledged the need to take another look at the Fed's rules on investments.
"We understand very well that the trust of the American people is essential for us to effectively carry out our mission. And that is why I directed the Fed to begin a comprehensive review around the ethics rules around activity by federal officials," he said.
In the decentralized system, the local boards of directors of the regional banks will pick a new president, subject to approval by the Fed board.