On Wednesday, Raphael Bostic, the president of the Atlanta Federal Reserve Bank, revealed that he will be retiring early next year after eight years in the role.
Bostic made history as the first Black and openly gay president of a regional Fed bank, a notable achievement in the central bank’s 111-year existence. However, his tenure has not been without controversy; he faced scrutiny for a trading scandal in 2022. Bostic failed to report some of his own financial transactions, including those that occurred during the COVID-19 pandemic when the Fed was taking extraordinary measures to stabilize the economy. An investigation by the Fed’s inspector general concluded that he had breached internal rules, although he didn’t violate any laws.
Bostic has clarified that he did not engage in the trading activities himself.
The focus now shifts to who will take over as the new president of the Atlanta Fed. Former President Donald Trump has expressed his desire for greater influence over the central bank, particularly his wish to see interest rates lowered. Bostic had been cautious about slashing rates aggressively, which could align him with certain views at the Fed that aim to manage inflation carefully.
In August, Trump mentioned that he had dismissed Fed governor Lisa Cook from her position on the board in D.C., though this decision is currently postponed, pending a Supreme Court review in January about the legality of his actions. Furthermore, Trump will get to choose a new Fed Chair when Jerome Powell’s term expires in May.
The process to reappoint the presidents of the 12 regional Fed banks, including Bostic’s position, is set for March; this occurs every five years. Although the seven-member Fed board in Washington has the authority to replace any of them, this has never happened, as noted by David Wessel, a senior fellow at the Brookings Institution, in a recent paper.
By announcing his retirement in late February, Bostic will avoid the often tumultuous reappointment process, leaving room for significant changes in leadership at the Atlanta Fed.
The board of directors at the Atlanta Fed will establish a search committee made up of its nonbanking members to oversee the nationwide search for the next president. This selection will need to get the green light from the Fed board in Washington.
