Robert Kaplan, president of the Federal Reserve Bank of Dallas, announced Monday he will step down from the bank amid scrutiny over millions of dollars of financial trades he made at the outset of the coronavirus pandemic.
Kaplan said in a Monday statement that he will step down from the Dallas Fed on Oct. 8, six years and one month after he was appointed to lead one of the Fed system’s 12 reserve banks.
Kaplan and Boston Fed President Eric Rosengren, who also announced his retirement Monday, have been under growing pressure after financial disclosures obtained by The Wall Street Journal and Bloomberg revealed heavy trading in individual stocks and other investment products in late March and April last year. At the time, the Fed was launching an unprecedented effort to stabilize financial markets through more than dozen lending facilities.
“The Federal Reserve 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,” Kaplan said.
Kaplan added that he “adhered to all Federal Reserve ethical standards and policies” and that his “securities investing activities and disclosures met Bank compliance rules and standards.”
While both Kaplan and Rosengren may have complied with Fed rules, the backlash prompted Federal Reserve Chairman Jerome Powell to launch a review of the system’s standards — and a rebuke of his two colleagues at a press conference last week.
“No one on the FOMC is happy to be in this situation, to be having these questions raised,” Powell said, referring to the Federal Open Market Committee, the Fed panel that sets the bank’s monetary policy. The 12 reserve bank presidents rotate among voting and nonvoting spots on the FOMC each year; Kaplan is a voting member of the FOMC this year, and Rosengren is a nonvoting member.
“It’s something we take very, very seriously. This is an important moment for the Fed, and I’m determined that we will rise to the moment and handle it in ways that will stand up over time,” Powell said.
Despite his visible frustration with the trading scandal last week, Powell in a Monday statement praised Kaplan as “a passionate and forceful public voice on a wide range of issues, including the critical value of early childhood education and literacy.”
Unlike members of the Fed Board of Governors — who are nominated by the president and confirmed by the Senate — reserve bank presidents are directly hired by several of the bank’s directors, who are typically business and community leaders within that region.