By Howard Schneider

WASHINGTON (Reuters) – Atlanta Federal Reserve President Raphael Bostic said Thursday he welcomed a Board of Governors ethics review following the resignation of two of his colleagues this week, and felt that the Fed’s process for replacing them is adequate to ensure a diverse set of applicants is considered for the high-profile jobs.

Bostic made comments to reporters, saying that “the world has changed” and that he believed it was appropriate to examine the rules and implement changes necessary to maintain trust. Bostic said that he had asked the Atlanta Fed’s general counsel for suggestions about how to improve things.

Fed is regarded as a technocratic institution that has been removed from politics. Reports have surfaced that two heads of the Fed’s twelve regional banks traded in securities and stocks at the Fed’s huge effort to end the Pandemic. On Monday, Robert Kaplan (Dallas Fed President) and Eric Rosengren (Boston Fed President) announced their resignations. However each claimed that their actions were approved and vetted by their local ethics officers.

Fed Chair Jerome Powell announced Monday that he had opened a wide-ranging review of ethics regulations in the Fed system. He promised improvements to improve confidence in its enormous powers. His potential renomination to the Fed Chair position by President Joe Biden is still unknown. The controversy has also given critics new ammunition about Powell’s oversight of the institution.

The controversy also renewed calls for reform of Fed’s complicated structure and selection process for regional bank heads. Although the hiring power is shared between the two private boards responsible for overseeing each of 12 regional banks, and the Fed’s Washington-based, presidentially appointed Board of Governors; there is no public review of candidates or vetting of them, much like the Senate hearings.

The process has been criticized for being out of line with the modern requirements of transparency in policy-setting and for allowing for a lot of partisanship when it comes to appointments.

Bostic became the first African American hired by one of the Reserve Banks in 2017 as the chief executive. The replacement of Kaplan (a retired Goldman Sachs (NYSE):) executive and Rosengren (a Fed veteran), will be carefully scrutinized.

Bostic indicated that the current system “has been working well.” We have noticed a raised awareness over the years that ensures the application process…looks at a variety of career paths and backgrounds.

He also said that the Washington governors will be watching this process to ensure that every reserve bank board thinks about it in an open manner.