The new financial revelations from the Fed omit the officials who started the ethics scandal.


The Federal Reserve did not release updated financial information on two former regional bank presidents whose exchanges sparked a central bank scandal, even though they held important monetary policy roles during the most of 2021 – the year covered by a new round of disclosures released on Friday. .

Robert S. Kaplan, the former president of the Federal Reserve Bank of Dallas, and Eric Rosengren, former Boston Fed chief, both resigned in September as the trade scandal story unfolded. Mr. Kaplan said the focus on trades was distracting from the work of the Fed, and Mr. Rosengren cited health concerns.

Although both have assumed their political roles for most of the past year, when the Fed debated market-critical topics such as how to handle the onset of rapid inflation and when to withdraw economic support , none of their reserve banks have released new information to cover the end of their terms. Instead, the banks released statements for the interim presidents who succeeded Mr. Kaplan and Mr. Rosengren.

“The rules in place when Chairman Kaplan left did not require him to file an updated financial statement upon his departure,” James Hoard, a Dallas Fed representative, wrote in an email.

A Boston Fed representative offered a similar explanation.

Mr. Kaplan traded individual stocks and complex financial instruments in 2020, and Mr. Rosengren traded real estate-related securities, which could have been influenced by Fed policy. Fed board colleague in Washington, Richard H. Clarida, pulled his money out of stocks and back in quick succession on the eve of a major Fed release that could have boosted stock prices . The central bank has radically overhauled its ethics framework after public outcry erupted in response to the trades of the three officials.

But the fact that the world may never know what the two presidents traded in their final months in office highlights the peculiarities of the Fed’s structure — and how that can limit liability. Mr. Clarida was required to file a financial disclosure statement once he stepped down, as a publicly accountable, president-appointed board member.

But these federal rules do not apply to regional federal banks.

The 12 reserve banks are structured in private establishments, and they are not subject to transparency rules applicable to public officials, such as the Freedom of Information Act (although many say they adhere to it in spirit). Until the Fed ethics reform passed earlier this year, which mandated that presidents publish financial transactions publicly within 30 days, they had looser oversight than many other influential government officials.

Even the Fed Board is somewhat limited in its ability to control regional presidents.

“We don’t have that information at the board and I’ve asked the inspector general to investigate, and that’s outside my purview,” said Fed Chairman Jerome H. Powell. , said earlier this year when asked for more details about Mr. Kaplan’s transactions in 2020 and their timing. “I play no part in it and I seek to play no part in it.”

The 2020 Fed trading investigation that Mr. Powell referred to, which the Fed’s independent watchdog is conducting, is continuing.


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