Advocacy groups call for removal of Federal Reserve officials over trades while in office

Two financial advocacy groups are calling for the removal of top Federal Reserve officials whose 2020 investments have come under scrutiny and prompted a review of the central bank’s ethics rules. 

Better Markets, a nonprofit organization established in the wake of the 2008 financial crisis that advocates for greater financial regulations, wrote in a letter Tuesday addressed to Federal Reserve Chairman Jerome Powell that “any president engaging in pandemic profiteering trading should resign or be fired.” 

The group’s president and CEO, Dennis Kelleher, wrote in the letter that the “trust of the American people” has “been seriously undermined by the reported trading activities of several regional Fed Presidents during the pandemic when hundreds of thousands of Americans were dying and tens of millions were being thrown out of work.” 

“Whether those actions were legal and whether they involved trading while in possession of material nonpublic information, those actions have nonetheless seriously called into question not just the adequacy of the Fed’s code of ethics, but the judgment, priorities, and leadership ability of those individuals,” he added. 

Earlier this month, The Wall Street Journal found that the president of the Dallas Federal Reserve bank, Robert Kaplan, and Boston President Eric Rosengren, participated in large stock trades while setting monetary policy. 

The news outlet reported, for example, that Kaplan traded stocks in companies including Apple and Amazon, with some trades reaching well into the seven-figure range. 

Rosengren also made multiple real estate investments, according to the Journal. 

Benjamin Dulchin, director for the Center for Popular Democracy’s Fed Up campaign, also said Tuesday that the Fed leaders should resign, telling the Journal, “There are a lot of reasons that working people are right to wonder if the Fed has their best interests in mind.” 

“These trades are only the most obvious reason, but it makes it harder for the Fed to do its job,” he added. 

Meanwhile, former top Federal Reserve staff member Andrew Levin told the Journal that “President Rosengren should immediately resign or be removed from office” and “President Kaplan should take administrative leave pending the outcome of an external investigation of his trading activities.”

“An external investigation can examine the timing of Kaplan’s stock transactions and determine whether those transactions could have benefited from his access to confidential market-sensitive information,” he added. 

Last week, a Fed spokesperson told The Hill that Powell had issued a directive ordering a review of ethics rules surrounding permitted financial holdings and activities by senior staff members, including by “identifying ways to further tighten those rules and standards.” 

“The Board will make changes, as appropriate, and any changes will be added to the Reserve Bank Code of Conduct,” the spokesperson added at the time.