Both the Boston and Dallas Federal Reserve Banks will need new leadership, as their embattled chiefs on Monday each announced plans to resign.
Both chiefs have been criticized for personal stock trades made while the Central Bank has been making billions of dollars in monthly bond purchases to support the economy during the COVID-19 pandemic. While the Fed’s rules allow the trades, the chiefs were criticized for the appearance of conflicts of interest.
Boston Fed President & CEO Eric Rosengren was first to announce Monday he would step down, citing health concerns related to a kidney condition that he told staff will require a transplant. Rosengren was set to retire in June 2022, but instead will resign effective Thursday.
That announcement was followed later Monday by a statement from Dallas Fed President & CEO Robert Kaplan, who said he also would step down, effective Oct. 8.
"The Federal Reserve is approaching a critical point in our economic recovery as it deliberates the future path of monetary policy,” Kaplan said in his statement. “Unfortunately, the recent focus on my financial disclosure risks becoming a distraction to the Federal Reserve's execution of that vital work. For that reason, I have decided to retire….”
Following a two-day meeting of the Federal Open Market Committee (FOMC) last week, the Fed announced it could begin tapering its purchases of mortgage-backed securities as early as mid-November. That decision would be based on the continued overall improvement of the economy.
Once the two resignations become effective, the 19-member FOMC will have six vacant seats, with observers suggesting it present an opportunity to make the Fed leadership more diverse. Currently, just one of the regional bank presidents is Black (Atlanta Federal Bank Chief Raphael Bostic), while just three are women.
Rosengren has served as chief of the Federal Reserve Bank of Boston since July 2007. He is an alternate member of the FOMC. Before being appointed president & CEO, he spent 18 years in various positions with the Boston Fed, including as an economist and as executive vice president of the Supervision and Regulation Department and chief discount officer.
Kaplan has served as chief of the Federal Reserve Bank of Dallas since Sept. 2015. Before joining the Dallas Fed, he was a long-time executive at Goldman Sachs, and then faculty member and dean of the Harvard School of Business.
