Boston Fed chairman, stung by conflict of interest issues, to sell shares

Boston Federal Reserve Bank Chairman Eric Rosengren said Thursday he would sell his individual stocks and stop trading, as he tries to dispel questions about potential conflicts of interest that arose after he and other regional Fed chairmen have released their annual financial disclosure forms.

Rosengren’s disclosure record showed that he bought and sold shares of real estate investment trusts, or REITs, and other securities last year whose values ​​were likely affected by the central bank’s efforts to supporting financial markets as the economy plunged into recession. Rosengren’s REIT holdings have drawn particular attention as he has more than once warned that the coronavirus pandemic could hurt real estate values ​​and lead to bank loan losses.

In a statement, Rosengren said his personal savings and investment transactions comply with the Federal Reserve’s ethical guidelines. But to avoid “even the appearance of any conflict of interest,” he will sell his shares by September 30 and invest the proceeds in diversified index funds or cash savings. He will not trade those holdings while he remains chairman of the Boston Fed, the statement said. The moves do not affect his retirement plan.

“I made personal investment decisions last year permitted by the Fed’s ethical rules for asset types and transaction times,” said Rosengren, who has headed the Boston Fed since 2007. “Unfortunately, the emergence of such authorized personal investment decisions generated some questions, so I made the decision to divest these assets to underscore my commitment to the Fed’s ethical guidelines.”

The scrutiny of Rosengren’s investments came after the The Wall Street Journal reported that Federal Reserve Bank of Dallas President Robert Kaplan made multiple stock transactions over $ 1 million in 2020, according to his disclosure form. He also said he has a stake in the Kansas City Royals baseball team worth more than $ 1 million.

Documents filed by Fed chairmen rarely make the news, but the past year has been unusual as the central bank has cut interest rates to near zero, started buying huge amounts of government securities. Treasury and mortgage debt, and launched other programs to support financial markets and cushion the economy as it entered into free fall. His actions were widely seen as essential to ending the recession after just two months.

None of the investments Rosengren listed were valued at $ 1 million or more. Seven of his 11 holdings were valued between $ 1,001 and $ 50,000 and four between $ 50,001 and $ 250,000. They included shares of Chevron, AT&T, Pfizer and Verizon.

He has also owned REITs including Annaly Capital Management. Annaly and Similar Real Estate Trusts Buy and Sell securities backed by mortgages, a type of debt that the Fed buys at a monthly rate of $ 40 billion as part of its easy money policies.

Larry Edelman can be reached at [email protected] Follow him on twitter @GlobeNewsEd.

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