More Fed transparency. Fed Admits Yellen "Met With" FOMC Leaker In 2012, DOJ Probe Begins Just two weeks ago we pointed out the fact that The Fed had seemingly ignored Congressional demands for details with regard the 2012 FOMC Statement leak. Now we know why they missed the deadline: *YELLEN SAYS SHE MET WITH MEDLEY GLOBAL ANALYST IN JUNE 2012 *YELLEN SAYS SHE DIDN'T GIVE MEDLEY CONFIDENTIAL INFORMATION So she met with the analyst that leaked the statement... but didn't say anything? * * * Some background...as a reminder, ProPublica explains the leak... The Federal Reserve sprung a previously unreported leak in October 2012, when potentially market-moving information about highly confidential monetary deliberations made its way into a financial analyst's private newsletter. The leak occurred the day before the scheduled public release of meeting minutes that shed new light on the Fed's decision to embark on a third round of bond buying to boost the economy, ProPublica has learned. ... The newsletter containing the leaked material came from an economic policy intelligence firm called Medley Global Advisors whose clients include hedge funds, institutional investors and asset managers. On Oct. 3, 2012, Regina Schleiger, an analyst with the firm, sent clients a "special report" titled "Fed: December Bound." The report focused on the Sept. 12-13 open market committee meeting, where the panel had approved what's called "QE3," a new program of large-scale purchases of mortgage-backed and Treasury securities. Typically, the Fed chairman holds a news conference following the meetings to help explain the committee's actions. But when Bernanke did this on Sept. 13, he did not reveal the depth of disagreement within the committee about how effective the bond-buying program would be and whether it was worth the cost. Schleiger wrote, however, that the minutes due out the next day would reveal "intense debate between Federal Open Market Committee participants." Schleiger also revealed that the Fed would likely continue buying longer-term Treasury bonds beyond December. As part of a program dubbed Operation Twist, the Fed had been selling short-term Treasuries to buy longer-term ones. Schleiger wrote that the committee would likely continue buying long-term bonds even after it sold all the shorter-term Treasuries. This information was not contained in the minutes and proved to be accurate. Her newsletter also explained in uncommon detail both how Fed staff constructed the minutes and various policy options that were recommended and the thinking of the leadership – Bernanke and vice chairs Janet Yellen and Bill Dudley. "It's not unusual for board staff to pull all-nighters working on the final draft of the policy recommendations, once these has [sic] been commented on," Schleiger wrote. "This one took until after midnight." Which resulted in an internal probe ordered by Bernanke that inevitably found no wrongdoing.. and so Congress took up the matter. But now, as The Wall Street Journal reports, The Fed has ignored that request... The Federal Reserve has not replied to a lawmakers’ request that it identify the individuals who had contact with a private consulting firm that published a report on the central bank’s market-sensitive internal policy deliberations. In October 2012, the day before the Fed released its minutes of its September 2012 policy meeting, Medley Global Advisors, sent a report to its clients with several sensitive details that subsequently appeared in the minutes. A central bank probe found a “few” Fed staffers had contact with Medley before the report, but did not identify them. Rep. Jeb Hensarling (R., Texas), Chairman of the House Financial Services Committee, sent a letter to Fed Chairwoman Janet Yellen on April 15 asking the Fed to name them by 5 p.m. EDT April 22. The deadline passed without any response by the Fed, a committee spokesman said Wednesday. The Fed declined to comment. Medley did not respond to a request for comment. * * * And now we know why they delayed (as Bloomberg adds), Federal Reserve Chair Janet Yellen said on Monday that the U.S. Department of Justice has joined the investigation into a leak of confidential monetary-policy information in 2012. “The Board’s Inspector General and the Department of Justice are in the midst of an investigation into this matter,” Yellen said in a letter to Representative Jeb Hensarling, chairman of the House Financial Service Committee. “We are cooperating fully with them and look forward to the results of their investigation,” she said. Yellen said she would also provide the names of Fed personnel who had contact with Medley Global Advisors, which published a report on deliberations of a September 2012 closed door meeting of the Federal Open Market Committee, one day before minutes of the meeting were made public. * * * The Justice Department has opened a formal investigation into the FOMC leak (and we suspect sworn testimony coming).
Naturally the FOMC deliberations must be highly confidential. Everyone beyond the FOMC itself must be informed by the Chair of FOMC policy decisions at the same time. There must be no leaks. The Fed is compulsive about public disclosure of policy decisions being done in a way that does not favor one group over another. This is an important investigation, and if anyone who leaked can be identified they will be fired. The Fed takes these matters very seriously. Regardless, I would not be surprised to learn of staff reassignments as a precaution. The FOMC delberations, like all Fed activities, are disclosed to the public. In the case of the FOMC meeting minutes, however, by necessity, they are disclosed after the Chair announces the official policy position of the committee, but of course to everyone at the same time. My guess is that the Fed would prefer to have DOJ investigate rather then see this incident turned into a media circus by Congress.
According to the article, Yellen met with the "leaker" in 2012. No one was fired. Here we are, three years later and the Fed has ignored Congressional (the same Congress who it supposedly answers to, according to you) requests for information. I'm sure it's pleased that the completely fair and balanced DOJ of this administration will be on the case now. "Not a smidgen" of wrongdoing will be found.
When did the DOJ investigation begin? You ought to know that before you get overly critical. Was the Hensarling request, sent two weeks ago, sent before or after the DOJ got involved? Rest assured the fed will not take such a matter lightly and has, in all likelihood, already taken action, probably two years ago. You will find out in due course what that action was and by whom. Neither Bernanke nor Yellen would want this to turn into a three ring Darrell-Issa-like show where grandstanding rather than facts are the order of the day.
Why does the DOJ have to step in. Shouldn't the Fed punish someone when it knows with certainty who that is? Why has it been three years? Why does it ignore Congress's request? Doesn't it answer to Congress? Haven't you told us this dozens of times? Your answers, as usual, are whatever is convenient for you (and the Fed) and twist with the wind.
Once again, the fed ultimately must answer to Congress because they are created by Congress and can be uncreated by Congress. However, and this is something you should learn sooner rather than later, Congress created the fed as an independent federal agency to isolate it from political pressures. So the fed does not have to answer to Congress on matters like the Henserling request. The fed will of course respond to any requests by Congress for information with regard to current policy, requests for data etc. But the least casual observer will have noted that the fed steers clear of any matter that might even remotely be deemed to have a political element to it. Congress can change their arrangement with the fed through legislation anytime the wish. I hope they don't however, because the fed's independence is one of the attributes that makes the U.S. fed the most effective and competent central bank in the world. I don't know why DOJ is involved. I suppose either a Congressman asked them to get involved, hoping to score political points, or possibly Yellen asked them to investigate, which seems unlikely, because such matters are usually handled internally. In fact, I'm certain the fed has already dealt with this matter, and taken steps to make sure it doesn't happen again.
At least you've got consistency in your argument. So ignoring the request for info from Congress, when it ultimately answers to Congress was a good idea. Oook. The Fed is not independent, effective or competent. It is beholden to the banks and does whatever is best for them. Sure, because this is the first time a leak has ever occurred at the Fed. (sarcasm). So we know they've handled it before.
What predictions? That the Fed isn't transparent? I post example after example after example of it. Please list any other "predictions" you are referring to. Isn't my fault if you're so drunk on the kool-aid that you have to perception of reality. Keep hopping through the field, grasshopper. It's bright and sunny. Pay no attention to the ants.
Obama DOJ providing cover for Yellen to ignore congressional subpoena. Still no documents provided to congressional investigators. Yellen was the leaker and the DOJ and Inspector General are giving her excuses to ignore the subpoena. What we have here is the CB Chairman who is in hot water and being provided favors by the Administration to keep her out of trouble. Of course we're all confident that the administration wouldn't use this leverage in an attempt to gain control of the monetary policy they desire. Right? http://www.cnbc.com/id/102730152