When last we checked in [9] with Rep. Jeb Hensarling, the Chairman of the House Committee on Financial Services, he was in the process of learning a frustrating lesson about central bankers in the post-crisis world.
What Jeb might not have realized when he subpoenaed the Fed for information on how the September 2012 FOMC minutes managed to get leaked to Medley Global Advisors (just four months after Janet Yellen met with the firm) is that whatever pretension of accountability the position of Fed chair retained in the lead up to the crisis disappeared entirely when Ben Bernanke 'saved the world' from financial armageddon in 2008.
Since then, central bankers have become celebrities and like celebrities, are generally above the law, a fact Yellen probably thought she had made clear to Hensarling when she simply refused to cooperate with the subpoena.
As a reminder, here is the sequence of events (from the beginning):
On October 3, 2012, consulting firm Medley Global Advisors sent a newsletter to clients entitled “Fed: December Bound.”
The "special report" essentially constituted an early leak of the minutes from the FOMC's September meeting.
Source: ProPublica [10]
An internal investigation by then-Chairman Bernanke revealed that some members of the committee had met with the firm that year but the names were not disclosed. On April 15, Congress sent Yellen a letter requesting that the Fed furnish a list of names no later than April 22.
That deadline came and went with no response.
On May 4, the Fed acknowledged a DoJ and OIG criminal investigation into the leak, and in the same letter, Yellen admitted that indeed, she had met with the analyst who penned the newsletter at the center of the controversy.
Subsequently, The Committee on Financial Services subpoenaed the Fed for records related to the central bank’s review.
The Fed has declined to comply in full citing the ongoing criminal investigation. More specifically, Yellen says the OIG has advised the Fed that providing access to the information requested by congress would risk "jeopardizing the investigation."
Well, Hensarling - bless his heart - isn’t giving up and will now interview "a number" of Fed staffers in connection with the leak according to WSJ [11]. Here’s more:
A House panel has lined up “a number” of interviews with Federal Reserve staffers related to the possible leak of confidential information from a 2012 Fed policy meeting, the panel’s chairman said in an interview.
House Financial Services Committee Chairman Jeb Hensarling (R., Texas) said the Fed has no legal basis for refusing to comply fully with a subpoena from the committeeon the leak probe. He also argued the Fed has no grounds to invoke “executive privilege,” the authority claimed by the president or other executive branch agencies to avoid releasing certain information.
“They are violating the law at the moment,” Mr. Hensarling said.
Fed Chairwoman Janet Yellen has said turning over the information at this time could interfere with an ongoing criminal probe of the matter. She said the Fed intends to cooperate as soon as its inspector general, which is conducting the criminal probe with theJustice Department, indicates that doing so won’t compromise their investigation.
Ms. Yellen did, however, provide the names of Fed staffers who had contact with the policy information service firm that published the information.
“We do have transcribed interviews with a number of witnesses that are lined up, but we haven’t quite seen eye-to-eye on the production of documents,” Mr. Hensarling said, adding that he is trying “to be respectful” and work with the central bank.
Asked if the committee may move to hold the Fed chairwoman in contempt—the next step in the process—Mr. Hensarling declined to say.
“We want the chair to tell the truth,” he said. “Somebody has to be held accountable.”
We sincerely wish Hensarling the very best of luck in this endeavor but we can’t say we are particularly optimistic about his chances.
Yellen will give her semi-annual Humphrey-Hawkins testimony to Congress on Wednesday and Thursday this week. Perhaps some brave soul will interrupt the litany of liftoff dialogue with some tough questions about transparency and accountability.
Then again, judging from the response WSJ's Pedro da Costa got [12] when he dared to question Yellen about the leaks, we doubt she'll be very forthcoming if pressed.
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Artist's impression of the honorable Chairwoman if questioned about the leak:


