Ann Saphir/Reuters
- Two Federal Reserve regional presidents apologized on Thursday for multi-million-dollar stock purchases.
- Dallas and Boston Fed presidents Robert Kaplan and Eric Rosengren expressed regret for their investment decisions.
- Both said they would reinvest some of the money in passive index trackers or simply hold cash.
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Two Federal Reserve regional presidents apologized on Thursday for multi-million-dollar share purchases that generated the "appearance" of conflicts of interest, according to multiple reports.
In simultaneous statements, Dallas and Boston Fed presidents Robert Kaplan and Eric Rosengren expressed regret for their investment decisions, which involved purchases of big-name firms like Apple, Alibaba, and Tesla.
"I have made the decision to divest these assets to underscore my commitment to Fed ethics guidelines," said Rosengren, per a Financial Times report. "It is extremely important to me to avoid even the appearance of a conflict of interest."
Similarly, Kaplan said he wanted to "avoid even the appearance of any conflict of interest."
Both men said they would reinvest some of the money in passive index trackers or simply hold cash, and committed to not trade shares while in their positions.
"Doing things like this, although not prohibited by the rules, shows poor judgment and really hurts the reputation of the Fed," Roberto Perli, a former Fed economist, told Bloomberg. "Good that [Kaplan] and Rosengren said that they won't trade again as long as they are presidents. But the damage to the institution is done."
According to disclosures first reported by the Wall Street Journal, Kaplan held stakes in pandemic-era winners like Apple and Tesla but also big losers like Chevron and Delta. Rosengren actively traded real estate investment trusts, raising eyebrows about past comments he has made about risks to the real estate markets.
The regional Fed branches are not technically part of the federal government. Rather, they are self-financing companies owned by local banks who participate in the committee that sets monetary policy. However, in practice, the government has significant influence over what the regional Fed branches do.