Top GOP lawmakers are accusing the Federal Reserve of trying to “thwart” their efforts to discover who leaked market-moving information from the central bank.
The lawmakers said the central bank had previously deliberately refused to provide information regarding who leaked confidential information from within the Fed to an outside financial group, and failed to meet congressional deadlines to provide inforation.
{mosads}House Financial Services Committee Chairman Jeb Hensarling (R-Texas) and Rep. Sean Duffy (R-Wis.), who heads that panel’s oversight subcommittee, said Tuesday that the Fed had responded to their queries with “attempts to thwart congressional oversight.”
Specifically, they said that the Fed had previously closed an internal probe into the leak without finding the culprit, and only reopened it following their questions, which in turn allowed the Fed to not answer their questions because “the investigation was suddenly ‘ongoing.’”
While the Fed is now providing lawmakers with requested information, the two vowed to continue their probe while the Fed, and Justice Department, conduct their own probes.
The matter at question is how the firm Medley Global Advisers was able to detail for clients Fed deliberations one day before the central bank released its own account in the fall of 2012.
Fed deliberations can frequently move financial markets, and any advance knowledge of the institution’s thinking could provide a significant, and potentially illegal, trading advantage.
The fight over the Fed leak, and how the central bank is responding to the matter, also comes as lawmakers are mulling a host of reforms to the central bank, with many aimed at increasing outside oversight or curbing its authority.
On Monday, Federal Reserve Chairwoman Janet Yellen wrote to the lawmakers, telling them that the Fed Inspector General, as well as the Justice Department, were examining the leak. She also provided them with the names of Fed staffers that reported contact with Medley between June and October of 2012, around when the leak occurred. Yellen’s letter requested those names be kept confidential, and they were not disclosed in the public version of the letter.
Yellen also told lawmakers Monday that she was among the Fed officials that met with Medley. While still vice chairwoman of the Fed, Yellen met with an employee at the firm in June 2012 to “hear her perspectives on international developments.”
Yellen added that that meeting came well before the leak occurred, and no confidential information was shared.
“Nothing Medley Global Advisors reported in October about the events of the September 2012 FOMC meeting could have been conveyed in June and I can assure you that, in any case, I did not convey any confidential information,” she wrote. “I am informing you of this contact because I believe it is appropriate to do so in my role as Chair of the FOMC.”
But Hensarling and Duffy have complained in the past that the Fed has been unresponsive to their queries regarding the leak, and said their questions are the only reason the Fed is looking into the matter currently.
“At a minimum, this disclosure suggests the Fed lacks sufficient internal controls to safeguard the confidentiality of market-sensitive information,” they said Tuesday.
This post was updated at 6:17 pm.