The Dallas Fed’s Robert Kaplan and Boston Fed chief Eric Rosengren announced they will be taking early retirement. Revelations of dubious trading activity by various Fed officials have weighed heavily on the credibility of the Federal Reserve in recent weeks. It’s about time! It’s not like the Fed had much credibility left to salvage. FOMC officials have demonstrated time and time again they have no shame.

The internet was quick to chime in on the news of Kaplan and Rosengren’s early retirement, but the best take of all has to be from Pam & Russ Martens at Wall Street On Parade. They note that Kaplan’s disclosures reveal interesting trading activity going all the way back to 2015. Apparently Kaplan was a high roller dabbling in the S&P futures going back 5 years.

“Each of Kaplan’s financial disclosures forms dating back to when he first became Dallas Fed President on September 8, 2015 (which we obtained directly from the Dallas Fed), show that Kaplan was trading in and out of S&P 500 futures, a highly speculative form of trading used by hedge funds and day traders. Each of Kaplan’s S&P 500 transactions are listed at “over $1 million.”

Another interesting point made by the Martens is that so far nobody has flagged the brokerage executing all of those expensive trades for Kaplan. Jerome Powell himself should be made to account for this since he’s the one heading this flagrantly out-of-control institution.

“Since it does not appear that this brokerage firm blew the whistle on Kaplan, the obvious question is, was it cloning his trades on the belief that he was trading on inside information. This aspect deserves a serious investigation by the Securities and Exchange Commission as well as the Department of Justice, as does the date and times of Kaplan’s trading.”

As he heads for the exit Kaplan insists he has done nothing wrong. In central bank speak it was all just a big misunderstanding, a “distraction”.

“During my tenure, I have adhered to all Federal Reserve ethical standards and policies. My securities investing activities and disclosures met bank compliance rules and standards.” (hot beverage warning with that one)

In the words of the fictional character Gordon Gekko greed is good. It’s pretty comical to think a Goldman Sachs alum had everyone in the Dallas area fooled up until a few weeks ago when Kaplan’s disclosures became public. The scandal of an unaccountable, out-of-control Federal Reserve was common knowledge to many like myself who have been watching for years. The Fed’s morally bankrupt behavior took on new meaning when Wall Street Journal reporter Michael Derby opened Pandora’s box with the initial disclosures and insights into pandemic profiteering by FOMC officials.

It’s almost as if the American public have no idea what the Federal Reserve really does. Powell and other FOMC officials probably liked it that way. It would have been convenient if the American public forgot about the last 12 years of endless Wall Street bailouts and trickle-down monetary policy enriching the wealthy and well-connected. At least now that the trading scandal is making national news, reform at the Federal Reserve is seemingly more possible.

While late to the party, the Dallas Morning News finally realized they have a major story on their hands. Better late than never.

Ben Hunt provided a colorful yet accurate assessment of Rosengren’s free pass into the sunset:

“A junior analyst at Citi who traded her PA like Rosengren would not be allowed to “resign for health reasons”. She’d be fired and blackballed from working on Wall Street again.”

Kaplans’ behavior is arguably worse. The timing is nothing short of a chef’s kiss. He gets to ride the Fed’s liquidity firehose on the way up and sell at all-time highs. He even gets thanked by Jerome for a wonderful job. It’s a shame he decided not to stick around for comprehensive ethics reform at the Fed. Perhaps Congress will finally look at the Federal Reserve’s bloated $billion-per-year budget and realize there is a huge amount of unproductive/counterproductive bloat there.

We can only hope.

“Most of us are still too sane to piss in our own cistern, but we allow others to do so and we reward them for it. We reward them so well, in fact, that those who piss in our cistern are wealthier than the rest of us.” Wendell Berry