Fed Presidents Resign
Two Federal Reserve Presidents involved in a scandal for trading stocks that may have benefitted from the Fed’s market intervention announced their resignations on Monday.
Robert S. Kaplan, the President of the Federal Reserve Bank of Dallas, will step down on Oct. 8. and the President of the Federal Reserve Bank of Boston, Eric S. Rosengren, will step down on Thursday, nine months ahead of schedule. Mr. Kaplan stated that the scandal was the reason for his resignation, while Mr. Rosengren stated that he had to leave early due to health concerns.
The resignations come just one day before Federal Reserve Chair Jerome Powell is scheduled to spend two days on Capitol Hill briefing lawmakers on the central bank’s efforts to battle the economic effects of the pandemic.
After the Wall Street Journal reported that Kaplan made large trades in well-known firms like Amazon, Apple, and Delta Air Lines, controversy exploded.
Following the revelations, both Kaplan and Rosengren said that they would sell their holdings to prevent the appearance of a conflict of interest. The Fed has purchased corporate bonds from giant corporations like Apple and has undertaken trillions of dollars in asset purchases to boost market liquidity.
Why on earth are Fed officials allowed to trade securities when their policy decisions directly impact the markets? Talk about a conflict of interest! We like to remain unbiased here on Invstr Crunch, but this is quite scandalous.
Fed chair Jerome Powell promised the central bank would make changes and that the Fed would conduct a thorough review of the situation and consider how they might tighten their regulations and standards.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
