Two US Fed chiefs quit as controversy over stock trades ramps up

Two of the US central bank’s regional chiefs have stepped down as the fallout from controversial stock trades they made accelerates.

Dallas Federal Reserve President Robert Kaplan became the second regional central bank leader to resign on Monday, after Boston Fed President Eric Rosengren took an early retirement.

Controversy has swirled over both men due to disclosures showing they had taken stakes in US listed companies while holding their posts at the regional central banks.

In a statement, Kaplan said: “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,”

Rosengren said he was resigning due to health concerns.

Concerns have been raised by Kaplan and Rosengren’s portfolios due to the Fed pumping money into financial markets to prop them up during the Covid-19 crisis.

Speaking last week after the Fed’s Federal Open Market Committee meeting, chair Jerome Powell vowed to strengthen oversight of senior Fed members’ holdings.

“We need to make changes, and we’re going to do that as a consequence of this,” Powell said last week. “This will be a thorough going and comprehensive review. We’re going to gather all the facts and look at ways to further tighten our rules and standards.”