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Kaplan and Rosengren, Fed Presidents Under Fire for Trades, Will Step Down


Two Federal Reserve officials who recently came under fire for securities trading in 2020, when the central bank was active in rescuing financial markets from the pandemic crisis, announced on Monday that they would leave their positions.

Robert S. Kaplan, who heads the Federal Reserve Bank of Dallas, will retire on Oct. 8, according to a statement released Monday afternoon. Mr. Kaplan gained attention for buying and selling millions of dollars in individual stocks, among other investments, last year.

Mr. Kaplan directly referenced the controversy in his decision to retire.

“Unfortunately, the recent focus on my financial disclosure risks becoming a distraction to the Federal Reserve’s execution of” its “vital work,” he said in the statement. He also noted that his “securities investing activities and disclosures met bank compliance rules and standards.”

Eric S. Rosengren, who is the president of the Federal Reserve Bank of Boston, will retire on Thursday, he said in a news release earlier on Monday. He said he was retiring earlier than planned to try to prevent a kidney condition from worsening, to stave off dialysis.

Mr. Rosengren held stakes in real estate investment trusts and listed purchases and sales in those, at a time when he was warning publicly about risks in the commercial real estate market and helping to set policy on mortgage backed security purchases.

Both presidents had previously announced that they would convert their financial holdings into broad-based indexes and cash by Sept. 30.

Jerome H. Powell, the Fed chair, offered statements of support for both officials in the releases announcing their exit. Nevertheless, he had been clear during a news conference last week that the Fed took the financial activity last year seriously, and he ordered a review of the central bank’s ethics rules shortly after news of the financial activity broke.

“No one on the F.O.M.C. is happy to be in this situation, to be having these questions raised,” Mr. Powell said, referencing the policy-setting Federal Open Market Committee. “This is an important moment for the Fed and I’m determined that we will rise to the moment.”

The watchdog group Better Markets had been calling for the Fed to fire both presidents if they do not resign.

Mr. Rosengren has been president of the Boston Fed since 2007, and his retirement was previously planned for June. The Fed’s 12 regional members rotate in and out of voting seats, and Mr. Rosengren would have had a vote on monetary policy next year. Mr. Kaplan would have voted in 2023.

Kenneth C. Montgomery, the Boston Fed’s first vice president, will serve as interim president at that bank. The Boston Fed’s board members — excluding bank representatives — will need to select a permanent pick for president, subject to approval from the Fed’s Board of Governors in Washington.

A longtime Fed employee who worked in research and bank supervision before becoming president, Mr. Rosengren played a key role in the 2020 crisis response. His regional Fed ran both the money market mutual fund and Main Street lending backstop programs that the Fed rolled out last year.

The Boston Fed noted in the release that Mr. Rosengren hoped that his health condition would improve, and that he would be able to “explore areas of professional interest” in the future.

In Dallas, Meredith Black, that bank’s first vice president, will serve as interim president until a successor is named.



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