"Above The Law" Fed Subpoena'd By Hensarling Over 2012 Leak "To The Priveleged Few"

Having missed the deadlines and ignored demands for details surrounding the leak of the 2012 FOMC Minutes to an outside newsletter writer, The "above the law" Fed is now facing more problems:

  • *HENSARLING SUBPEONAS FED FOR DOCUMENTS ON 2012 LEAK
  • *HENSARLING SAYS FED HAS RESISTED COMMITTEE OVERSIGHT

An immovable object just met an unstoppable faorce. Perhaps this means we get to see the list of names who had contact with Medley Global Advisors (that The Fed said they would hand over only in the case of secrecy).

“The Federal Reserve has acted in a manner that can only be characterized as resistant to accountablilty and oversight,”

 

“It is unacceptable, illegal and corrupt for anyone at the Fed to deliver inside information that could provide a financial advantage to the privileged few and lead to the manipulation of financial markets”: Hensarling

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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.

And then, 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.

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Then Janet Yellen herself admitted meeting with Medley Global Advisors...

So she met with the analyst that leaked the statement... but didn't say anything?

 

And so then The Fed agrees to name the leaker (but only in secrecy)

As The Wall Street Journal reports,

The Federal Reserve is providing a congressional panel with the names of its staffers who had contact with a consulting firm that published details of market-sensitive policy deliberations in October 2012, “with the understanding that the names will be kept confidential,” Fed Chairwoman Janet Yellen said.

 

“As you are aware, the [Fed] Board’s Inspector General and the Department of Justice are in the midst of an investigation into this matter,” Ms. Yellen wrote in a letter dated Monday to Rep. Jeb Hensarling (R., Texas), chairman of the House Financial Services Committee, and Rep. Sean Duffy (R., Wis.), who chairs the panel’s oversight subcommittee.

 

We are cooperating fully with them and look forward to the results of their investigation. To avoid compromising that investigation, these names are being provided with the expectation that they will be kept confidential.”

 

Mr. Hensarling did not respond immediately Monday to a request for comment.

So we'll happily tell you who leaked it... as long as you don't tell the public.

Audit The Fed!!!

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And so now, Hensarling is subpoenaing them...

The subpoena is necessary because the Fed has failed to comply with a request for documents, Hensarling, a Texas Republican, said in a statment Thursday.