(Bloomberg) — One of the Federal Reserve’s largest internal critics of the risks in U.S. real estate was an active investor in the sector last year, financial disclosures show.
Boston Fed President Eric Rosengren listed stakes in four separate real estate investment trusts and disclosed multiple purchases and sales in those and other securities, the documents show.
Boston Fed spokeswoman Lucy Warsh confirmed that Rosengren’s trades were not conducted via a blind trust but “his investment decisions are consistent with the system’s strong ethics rules and time frames.”
Separate filings for Dallas Fed chief Robert Kaplan, a former Goldman Sachs Group Inc. executive, showed multiple $1 million-plus transactions last year as the U.S economy was convulsed by Covid-19. He also disclosed a $1 million-plus stake in the Kansas City Royals baseball team.
The U.S. central bank slashed interest rates to zero in March as the pandemic spread and began buying hundreds of billions of dollars-worth of Treasuries and mortgage-backed securities to calm financial markets.
Rosengren, who has discussed his concerns in commercial real estate in public speeches, has also advocated for the Fed to consider scaling back its MBS purchases faster than Treasuries to avoid overheating the housing market.
Rosengren’s 2020 disclosure shows he bought and sold shares of Annaly Capital Management Inc., a REIT that holds agency mortgage-backed securities. The Fed buys $40 billion of this type of debt in its quantitative-easing program every month. As a Federal Open Market Committee participant in 2020, Rosengren would be party to staff briefings on the status of that market. Rosengren is an FOMC voting member next year.
The Wall Street Journal first reported Kaplan’s trading activity, which included transactions of over $1 million in more than a dozen companies including Delta Airlines Inc., Alphabet Inc.’s Google and Verizon Communications Inc.
“All transactions were reviewed by the Dallas Fed’s general counsel, who confirmed the transactions were in compliance with the bank’s code of conduct. No trades were made during the Federal Reserve’s blackout period, during which trading activity is prohibited,” the Dallas Fed said in a statement.
All 12 regional Fed banks have provided 2020 financial disclosures for their presidents. Most showed nothing unusual, with little or no trading reported last year.
“We have very clear rules and restrictions on activities — financial activities — and we have full disclosures around that,” New York Fed President John Williams separately told reporters Wednesday after a speech on the economy, though he declined to weigh in on whether those policies should be reviewed or changed.
(Updates with Annaly Capital MBS in seventh paragraph.)
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