Fed Governor Abruptly Resigns Amid Trading Violations and Ethics Probe

Former Federal Reserve Governor Adriana Kugler abruptly resigned in August after Chair Jerome Powell refused to grant her a waiver to address financial holdings that ran afoul of the central bank's ethics rules, according to a Fed official. Kugler also faced a probe by the Fed's internal watchdog related to her recent financial disclosures, which were posted on the website of the Office of Government Ethics. The disclosures revealed details related to financial activity that violated the Fed's internal ethics rules. The Office of Government Ethics (OGE) also declined to certify Kugler's newly released disclosures, referring the matter to the Fed's inspector general, according to a document released Saturday. Fed ethics officials declined to certify Kugler's latest disclosures, which were posted on the OGE website, and referred the matter to the inspector general. The OGE document showed that Kugler's financial activity had violated the Fed's internal ethics rules. Kugler announced her resignation on August 1, effective August 8, without citing a reason and after she missed the central bank's July 29-30 policy meeting. At the time, the Fed did not provide a detailed explanation for her departure. However, sources close to the matter revealed that Kugler's resignation was linked to her failure to comply with the Fed's ethics rules. According to a Fed official, Kugler's financial holdings had raised concerns among Fed ethics officials. "The Fed takes its ethics rules very seriously, and Governor Kugler's actions were in clear violation of those rules," the official said. The official added that the Fed's inspector general would investigate the matter further. The incident highlights the importance of maintaining transparency and accountability in the financial sector. "As a public institution, the Fed must uphold the highest standards of ethics and integrity," said a spokesperson for the Fed. "We take all allegations of misconduct seriously and will continue to investigate this matter thoroughly." Kugler's resignation marks the latest development in a series of controversies surrounding the Fed's ethics rules. In recent years, several Fed officials have faced scrutiny for their financial dealings, including trading in stocks and bonds. The incidents have raised concerns about the potential for conflicts of interest and the need for greater transparency in the financial sector. The Fed's inspector general is currently investigating Kugler's financial activity, and the outcome of the investigation is expected to be released in the coming weeks. The incident is likely to have significant implications for the Fed's ethics rules and the way financial institutions are regulated. As the investigation continues, the public will be watching closely to see how the Fed addresses the issue and ensures that its officials are held to the highest standards of ethics and integrity.