Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Fed resignations don't blunt calls for broader ethics changes

EconomySep 27, 2021 08:05PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. FILE PHOTO: Federal Reserve Board building is pictured in Washington, U.S., March 19, 2019. REUTERS/Leah Millis/File Photo

By Howard Schneider

WASHINGTON (Reuters) - U.S. consumer and public interest groups on Monday kept up the pressure on Federal Reserve Chair Jerome Powell to impose stricter ethics rules on Fed officials, after two Fed bank presidents resigned because of controversial investing activity last year.

As Powell looks to be appointed to a second four-year term, "The Federal Reserve from Powell on down is desperate to end this scrutiny without looking into whether there should be legal repercussions," for Dallas Federal Reserve president Robert Kaplan and Boston Fed president Eric Rosengren, said Jeff Hauser, head of the progressive Revolving Door Project.

Hauser said Powell "should have made referrals" for investigations of Kaplan and Rosengren by the U.S. Securities and Exchange Commission and the Department of Justice.

"These figures shouldn't be able to resign and move into consulting and hedge funds or private equity in six months hence."

On Monday, Kaplan and Rosengren [L1N2QT0ZZ] announced their imminent resignations after disclosure of their active trading activity during 2020, when the Fed was moving aggressively to bolster the economy with steps that ultimately drove asset markets to record highs.

Fed critics have said the U.S. central bank needs stricter ethics standards, noting that both men have said their investing activity was approved by ethics officers and comported with rules against using the Fed's troves of market-moving information for personal gain.

The resignations are "grossly insufficient," said Dennis Kelleher, head of the Better Markets think tank on financial regulation. He called for Powell to make a "full disclosure of everyone at the Fed who traded during the pandemic while in possession of nonpublic information."

Fed officials are subject to the same ethics rules as members of Congress and other top government officials. They also are prohibited from trading during days around Federal Open Market Committee meetings, when the most sensitive information is distributed, and are not allowed to own financial sector stocks or mutual funds.

They also are subject to a broad command to avoid even the appearance of a conflict of interest. Their active investing during 2020, when tens of millions were unemployed, touched a sensitive nerve with the public, and they resigned less than three weeks after a Sept. 7 Wall Street Journal report on their investment activity.

Powell has opened a broad review of Fed ethics rules and at a press conference last week promised change. Asked if he had confidence in Kaplan and Rosengren he replied with a curt "no one is happy."

Kaplan said he resigned because his activity "risks becoming a distraction" to the Fed. Rosengren cited a worsening of a longstanding health issue that he hoped to better control with a lifestyle change. He was accepted onto the kidney transplant list in June, 2020.

White House officials had no comment on the Fed resignations. President Joe Biden is still mulling whether to appoint Powell to a second four year term when his current one expires in February.

Whether the issue affects Powell's chances may become clearer on Tuesday, when he appears before the Senate banking committee, which would have to confirm his nomination. Senator Elizabeth Warren, a Democrat on the committee who has frequently criticized Powell's financial oversight, also has called for tougher Fed ethics rules.

Investors have considered Powell's reappointment likely. Some of Biden's most progressive supporters say the Fed chief has set successful monetary policy for the pandemic, and Republicans have also endorsed him.

Fed resignations don't blunt calls for broader ethics changes

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
James Hilliard
James Hilliard Sep 27, 2021 10:04PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Con artists in the highest positions resign. Pot dealers do 10 years to life. thank troops, oinkers and teachers for their freedom to steal from everyone.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email