Dallas Federal Reserve Chairman Robert Kaplan became the second regional central bank executive to resign on Monday, saying he was resigning early following a recent controversy over the stock transactions he made .
Kaplan’s early retirement follows an announcement earlier today by Boston Fed Chairman Eric Rosengren, who announced his departure. He cited health issues, not the issue of his investment portfolio activity.
“The Federal Reserve is approaching a critical point in our economic recovery as it deliberates on the future course of monetary policy. Unfortunately, the recent focus on my financial disclosure risks becoming a distraction from the Federal Reserve’s performance of this vital work, ”Kaplan said in a statement.
“The recent emphasis on my financial disclosure risks becoming a distraction for the Federal Reserve’s execution of [its] vital work. “
His retirement takes effect on October 8. The resignations come a day before Fed Chairman Jerome Powell spent two days on Capitol Hill briefing lawmakers on the Fed’s efforts to combat the economic impact of the Covid-19 pandemic.
Controversy had erupted following revelations that Kaplan in particular had executed high-dollar transactions at high-profile companies such as Amazon, Apple and Delta Air Lines. The Wall Street Journal first reported the transactions.
Following the disclosures, Kaplan and Rosengren said they would sell their shares to avoid any appearance of conflict. Questions have been raised because the Fed has made billions of dollars in asset purchases aimed at helping markets function and bought corporate bonds from large-cap companies, including Apple.
Kaplan insisted he hadn’t done anything wrong.
“During my tenure, I have adhered to all of the Federal Reserve’s ethical standards and policies,” he said in his monthly statement. “My securities investment activities and information complied with the Bank’s compliance rules and standards. “
Still, the problem spilled over to the Fed, with officials pledging to tighten the rules so that such potential conflicts do not happen again.
“We have to make changes, and we’re going to do it accordingly,” Powell said last week. “It will be a thorough and comprehensive review. We will put all the facts together and look for ways to further tighten our rules and standards. “
Powell promised changes would be made.
“I want to be able to look back on those years and know that we rose to this challenge and handled it well and that what we did made a lot of sense and protected the public interest and the institution that we are. it’s all part of, ”he said.
On Monday, Powell wished Kaplan the best of luck and praised his work at 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,” the president said in a statement.
Meredith Black, the first vice president of the Dallas Fed who herself was planning to retire, will serve as the interim leader for the district until a permanent successor is chosen.