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For Immediate Release

Press Release

Fed’s Powell Must Place Embattled Bank Presidents on Leave, Ethics Watchdogs Write In Letter

WASHINGTON -

Today, Revolving Door Project Executive Director Jeff Hauser called on Federal Reserve Board of Governors Chair Jerome Powell to place Boston and Dallas bank presidents Eric Rosengren and Robert Kaplan on administrative leave while the Federal Reserve investigates possible insider trading. Read Hauser’s letter to Powell here.

Fed spokespeople confirmed yesterday that Powell “directed Board staff to take a fresh and comprehensive look at the ethics rules around permissible financial holdings and activities by senior Fed officials.” In his letter, Hauser expressed concern that this high-level review “would appear to neither directly redress Rosengren and Kaplan’s improprieties, nor would necessarily result in the most obvious, overdue policy response to this incident — banning Federal Reserve policymakers from trading individual financial securities. As government ethics watchdogs, we are concerned that an inadequate response to this incident poses serious threats to public trust in the institution you lead.”

Hauser issued the following statement:

“It really shouldn’t surprise anyone that a former Carlyle Group executive — a firm whose whole profit strategy is based on exploiting insider connections in the federal government — hasn’t prioritized ethics and oversight in running the nation’s largest stockpile of potentially market-moving information. The Fed’s outdated ethics policy of course precedes Powell, but failing to monitor for unethical activity during its massive COVID-19 response must fall on his shoulders.”

“Given the shocking nature of what is already known publicly, it is impossible for the public to have trust in Rosengren and Kaplan unless and until they have been cleared of serious wrongdoing by independent investigators. Meanwhile, Powell ought to move the Board of Governors toward new ethics rules that are in line with the Fed’s 21st-century activities. We’ve been told repeatedly that Powell has a completely unique ability to unite the Board of Governors behind his policies, so this should take him no time at all. Moreover, if the facts in either case indicate self-dealing, Powell should fire Kaplan or Rosenberg. Fed bank presidents who violate the public’s trust should face the consequences, no matter their personal prestige.”

The Revolving Door Project has been critical of Powell and opposes renominating him for a second term as Chair of the Federal Reserve. Read our prior writing about the Fed Chair nomination here.

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The Revolving Door Project (RDP), a project of the Center for Economic and Policy Research (CEPR), scrutinizes executive branch appointees to ensure they use their office to serve the broad public interest, rather than to entrench corporate power or seek personal advancement.

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