The Fed’s new financial disclosures omit the officials who ignited the ethics scandal.

The Federal Reserve failed to disclose updated financial information for two former regional bank presidents whose transactions sparked a scandal at the central bank, even though they served important roles in monetary policy for most of 2021, the year covered by a new set of disclosures. posted on Friday. .

Robert S. Kaplan, a former president of the Federal Reserve Bank of Dallas, and Eric Rosengren, a former head of the Boston Fed, resigned in September as the trade scandal story unfolded. Kaplan said the focus on trading distracted from the Fed’s work, and Rosengren cited health concerns.

Although both have held their policy roles for most of last year, when the Fed was debating market-critical issues such as how to handle the onset of rapid inflation and when to withdraw economic support, neither of their reserve banks released new disclosures to cover the term of their mandates. Instead, the banks released statements for the interim presidents who succeeded Kaplan and Rosengren.

“The rules in place when Chairman Kaplan left did not require him to submit an updated financial disclosure upon his departure,” Dallas Fed representative James Hoard wrote in an email.

A representative from the Boston Fed offered a similar explanation.

Mr. Kaplan traded individual stocks and complicated financial instruments in 2020, and Mr. Rosengren traded real estate-linked securities, which could have been influenced by Federal Reserve policy. A colleague at the Fed’s Washington board, Richard H. Clarida, took his money out of stocks and put it back in quick succession on the eve of a major Fed statement that could have boosted stock prices. The central bank drastically revised its ethics framework after public outcry erupted in response to the three officials’ exchanges.

But the fact that the world never knows what the two presidents negotiated during their final months in office highlights the peculiarities of the Fed’s structure and how it can limit accountability. Mr. Clarida was required to file a financial statement once he resigned, as a publicly accountable presidentially appointed board member.

But those federal rules don’t apply to the Fed’s regional banks.

The 12 reserve banks are structured as private institutions and are not subject to transparency rules that cover government officials, such as the Freedom of Information Act (although many say they adhere to it in spirit). Until the Fed’s ethics reform was adopted earlier this year, which required presidents to publish financial transactions within 30 days, they had looser oversight than many other influential government officials.

Even the Fed board is somewhat limited in its ability to police regional presidents.

“We don’t have that information on the board and I’ve asked the inspector general to do an investigation, and that’s out of my hands,” Fed Chairman Jerome H. Powell said earlier this year when asked for more details. on Mr. Kaplan’s trades in 2020 and his timing. “I don’t play any part in it, and I don’t seek to play any part in it.”

The investigation into the 2020 Fed operations that Powell referred to, which is being conducted by the Fed’s independent watchdog, continues.

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