A Fed official stated that former Federal Reserve Governor Adriana Kugler resigned suddenly because Chair Jerome Powell denied her a waiver for financial holdings that violated the central bank's ethics regulations.
TL;DR
- Former Fed Governor Adriana Kugler resigned after Chair Jerome Powell denied her financial holdings waiver.
- The Fed's inspector general investigated Kugler's recent financial disclosures for ethics violations.
- Kugler previously admitted to violating Fed trading rules after her husband bought stocks.
- Her resignation allowed President Trump to appoint Stephen Miran to the Fed board.
The Fed's internal watchdog also investigated Kugler regarding her recent financial disclosures prior to her August departure, as indicated in a document published on Saturday.
Ethics officials at the Federal Reserve refused to approve Kugler's most recent financial disclosures, which were published on the Office of Government Ethics' website, and sent the issue to the board's inspector general, according to the document. These disclosures outlined financial activities that seemed to contravene the Fed's own ethics regulations.
Kugler announced on Aug. 1 that she would resign effective Aug. 8, without citing a reason and after she missed the central bank’s July 29-30 policy meeting. At the time, the Fed said her absence from the meeting was due to a “personal matter.”
Ahead of that meeting, Kugler requested a waiver to conduct financial transactions to address what the Fed official described as impermissible financial holdings. She discussed that request with Powell, who denied it, according to the official. It wasn’t immediately clear which holdings were involved in that request.
Kugler declined to comment.
Fed ethics official Sean Croston stated in a financial disclosure released Saturday, “Consistent with our standard practices and policies, matters related to this disclosure were referred earlier this year by the Board’s Ethics Office to the independent Office of Inspector General for the Board of Governors of the Federal Reserve System.”
The financial filing, submitted approximately one month after Kugler's exit, encompassed the 2024 and 2025 calendar years up to her resignation. Senior Federal Reserve officials must file disclosures each year and following their departure from the central bank, along with reporting ongoing financial dealings.
Previous Violations
During 2024, in its regular financial reports, Kugler admitted that she had violated Fed regulations on investments and trading after her husband bought four blocks of stock in Apple Inc. And Cava Group Inc.
Those trades violated the central bank’s rules that limit how senior Fed officials, their spouses and minor children invest and trade, including a general prohibition on the purchase of individual stocks.
Kugler stated her husband completed the transactions unbeknownst to her. The stock was subsequently sold, and the Fed's assigned ethics officer determined Kugler had adhered to relevant statutes and rules, as indicated by the filings.
Kugler’s resignation gave President Donald Trump an earlier-than-expected opportunity to fill a slot on the Fed’s board in the midst of his intense pressure campaign urging policymakers to drastically lower interest rates. The opening ultimately went to Trump ally Stephen Miran, who took an unpaid leave of absence from his post as a White House economic adviser and has called repeatedly for rapid rate cuts.
In 2022, Powell implemented stricter restrictions on investing and trading regulations for central bank policymakers and senior employees. This action was taken after disclosures of irregular trading by multiple high-ranking officials in 2020.
Boston Fed President Eric Rosengren and Dallas Fed chief Robert Kaplan both declared their early retirement following the revelations, with Rosengren attributing his decision to poor health. While the Fed’s internal oversight body ultimately absolved the two of any legal infractions, chastised them for eroding public trust in the nation's central bank.
At the time, the Fed stated that the updated regulations, designed to bolster public trust in the unbiased nature and soundness of policymakers' decisions, enhanced financial disclosure obligations, alongside other provisions.