Dallas Federal Reserve Bank President Robert Kaplan, who became the second regional central bank governor to resign on Monday, said that he will step down early after the recent controversy arising from his recent stock market transactions.
Kaplan’s early retirement was announced earlier in the day by Boston Fed Chairman Eric Rosengren. He said he would also leave, but mentioned health issues rather than issues with his portfolio activities.
“The Federal Reserve is approaching a critical point in our economic recovery because it is reviewing the future path of monetary policy. Unfortunately, the recent focus on my financial disclosures may distract the Federal Reserve from performing this important work,” Kaplan said A statement.
His retirement will take effect on October 8. The day before his resignation, Fed Chairman Jerome Powell will spend two days on Capitol Hill to inform lawmakers of the Fed’s efforts to deal with the economic impact of the Covid-19 pandemic.
After disclosing that Kaplan had conducted large dollar transactions with well-known companies such as Amazon, Apple and Delta Air Lines, there was a debate surrounding this issue. The Wall Street Journal first reported these transactions.
After the disclosure, both Kaplan and Rosengren stated that they would sell their shares to avoid conflict. The question is raised because the Fed has made trillions of dollars in asset purchases to help the market operate and has purchased corporate bonds from large companies including Apple.
Kaplan insisted that he did nothing wrong.
“During my tenure, I have complied with all the ethical standards and policies of the Federal Reserve,” he said in a monthly statement. “My securities investment activities and disclosures comply with bank compliance rules and standards.”
Nonetheless, this issue has caused repercussions at the Fed, and officials have promised to tighten rules to prevent such potential conflicts from recurring.
“We need to make changes, so we will do this,” Powell said last week. “This will be a thorough and comprehensive review. We will gather all the facts and look for ways to further tighten our rules and standards.”
Powell vowed to make a change.
“I hope to be able to look back on this year from now, and know that we have stood up to meet this challenge, and handled this situation well, and what we have done is meaningful and protected the public’s interests and ours. It’s all part of the institution,” he said.
Powell wished Kaplan all the best on Monday and praised his work at the Dallas Fed.
The chairman said in a statement: “He has been an enthusiastic and powerful public voice on a wide range of issues, including the key values of early childhood education and literacy.”
Meredith Black is the first vice president of the Dallas Federal Reserve Bank. She herself plans to retire. She will serve as the temporary head of the region until a permanent successor is elected.
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