By Ann Saphir
(Reuters) – The Federal Reserve Bank of Dallas has kicked off a search for a new president to replace Robert Kaplan, the bank’s previous top executive who left last month after a scandal over his personal financial transactions.
The bank’s search is being led by its non-bank directors, it said in a statement on Wednesday. The bank hired the executive search firm Egon Zehnder to assist in recruiting candidates.
Kaplan and former Boston Fed President Eric Rosengren drew criticism in September after revelations that they had made extensive personal trades in 2020 during the height of the pandemic crisis and the Fed’s efforts to stabilize markets and rescue the economy.
Both said their trades were in line with the Fed’s ethics guidelines at the time and agreed to divest their stock holdings. But the furor did not subside and ultimately both left their posts. Kaplan retired Oct. 8.
The scandal has been a headache for Fed Chair Jerome Powell, who is under consideration for a second four-year term. To deal with the fallout, Powell launched a review of the Fed’s trading rules. That resulted in a rewrite of guidelines that now bar the kind of individual-stock trading that Kaplan undertook. The new rules limit the types of holdings and transactions permitted for policymakers.
The Dallas Fed’s job description includes a requirement for “unwavering ethics, character, and integrity.”
The bank did not provide a timeline for its search, but similar efforts at other banks and at the Dallas Fed itself have typically taken six to 12 months. The Dallas Fed chief rotates into a voting spot on the Fed’s policymaking panel in 2023.
(Reporting by Ann Saphir; Editing by Dan Burns, Chizu Nomiyama and Cynthia Osterman)
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