Federal Reserve member quits on role in leak to financial analyst
WASHINGTON -- Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, has resigned after acknowledging improper discussions with a financial analyst.
In his resignation statement Tuesday, Lacker said that in October 2012 he spoke to an analyst at Medley Global Advisers who possessed “highly confidential” information about interest-rate decisions the Fed had considered at its September meeting. He said in a statement that he “did not refuse or express my inability to comment.” Further, he said he failed to disclose in subsequent investigations the details of his conversation.
Lacker, who had already announced in January that he was planning to step down this year, called his conduct “inconsistent” with the Fed’s confidentiality policies. The subject of his discussion with the analyst, according to CNBC, was a change in the Fed’s bond-buying program, which it used to keep long-term interest rates down in a bid to stimulate the sluggish post-recession economy.
“I deeply regret the role that I may have played in confirming this confidential information and in its dissemination to Medley’s subscribers,” Lacker said.
Medley, which is owned by the Financial Times newspaper, describes itself as “a premier provider of macro policy intelligence to the world’s top investment banks, hedge funds and asset managers”
Members of Congress have sharply criticized the Fed for not providing information regarding its investigation into the matter. House Financial Services Committee Chairman Jeb Hensarling, a Texas Republican, had been sharply critical of the Fed’s refusal to provide information on the investigation.
Fed Chair Janet Yellen in 2015 had told the committee that she was unable to provide some documents sought by his panel’s subpoena. That was because doing so, she said, could jeopardize a criminal investigation by the Justice Department and an on-going investigation by the Fed’s inspector general.
To Mark Hamrick, Bankrate.com’s senior economic analyst, the Fed’s future independence and effectiveness is “in question with Janet Yellen’s own role in doubt, given Donald Trump’s negative comments about her before he won the election.”
Yellen’s term as chair expires next year, although she can remain at the Fed as a member until 2024. President Trump, as a candidate, had criticized her for keeping interest rates too low and vowed not to reappoint her as chair. Some Republicans, including Hensarling, are backing legislation to give the Fed greater congressional scrutiny.
In a statement, the Richmond Fed said that it placed a “high priority on safeguarding information.” It said that once the bank’s board of directors learned of the outcome of the government investigations, it had taken appropriate actions.