Fed's Lacker leaves
central bank over leak of market-sensitive news
Send a link to a friend
[April 05, 2017]
By Jason Lange and Howard Schneider
WASHINGTON
(Reuters) - Richmond Federal Reserve President Jeffrey Lacker abruptly
left the U.S. central bank on Tuesday after admitting that a
conversation he had with a Wall Street analyst in 2012 may have
disclosed confidential information about Fed policy options.
The 2012 leak had triggered a criminal investigation after research firm
Medley Global Advisors told its clients the details of a key Fed meeting
a day before the Fed released its own record of the discussion.
At the Fed's September 2012 policy meeting, officials laid the
groundwork for the massive bond-buying stimulus they were to roll out
later that year. Early knowledge of that discussion could have given
some traders an unfair edge.
Lacker who had previously announced he would retire in October, on
Tuesday said he decided to make his departure effective immediately
because of his role in the leak.
It was not clear if Lacker was pushed out of his post. The Richmond Fed
said in a statement that it took "appropriate actions" after learning
the outcome of government investigations into the leak.
Lacker's lawyer said he would not be facing charges. The Fed's inspector
general, Mark Bialek, said in a separate statement that he was closing
an investigation into the leak.
![](http://archives.lincolndailynews.com/2017/Apr/05/images/ads/current/Monsanto_sda_SFARM_2017.png)
"I crossed the line," Lacker said in a statement, saying he never
intended "to reveal confidential information" and that he may have
broken rules against giving people an edge in business.
Lacker admitted to talking to an analyst from Medley in October 2012,
but did not say he provided her with details about the Fed's policy
options, which aimed to boost the economy following the 2007-09
financial crisis.
Lacker said it was the Medley analyst who brought up confidential Fed
information.
"I should have declined to comment and perhaps have ended the phone
call. Instead, I did not refuse or express my inability to comment and
the interview continued," Lacker said.
In addition, Lacker said he had not fully disclosed details about his
discussion with the Medley analyst when he was interviewed by a Fed
lawyer later in 2012. But he said he did disclose further details in a
2015 interview with the Federal Bureau of Investigation.
Lacker gave no reason for the time gap between the 2015 interview and
his statement on Tuesday.
The Medley report triggered furor in the U.S. Congress and became a
source of friction between the Fed and lawmakers, leading to a criminal
investigation.
![](http://archives.lincolndailynews.com/2017/Apr/05/images/ads/current/ldn_business_directory_small_2016.png)
[to top of second column] |
![](../images/040517pics/busine69.jpg)
Jeffrey Lacker, president of the Federal Reserve Bank of Richmond,
participates in a session titled, "Help or Harm: Central Bank
Monetary Policies at the Outer Limits" NABE Economic Policy
Conference in Washington March 5, 2013. REUTERS/Yuri Gripas
![](http://archives.lincolndailynews.com/2017/Apr/05/images/ads/current/st_claras_lda_082114.png)
"This
development could hurt the Fed politically," said Roberto Perli, an economist at
Cornerstone Macro.
In May 2015, the chair of the House of Representatives Financial Services
Committee, Jeb Hensarling, a Texas Republican who has called for stricter
Congressional oversight of the central bank, subpoenaed Fed documents and
communications related to the leak.
CRIMINAL INQUIRY
Lacker, one of the U.S. central bank's most reliable proponents of interest rate
increases, had led the Richmond Fed since 2004.
During his tenure, he became known for his dissenting votes on policy. He voted
against several Fed policy decisions in 2006 because he favored interest rate
increases, while in 2009 he opposed Fed purchases of mortgage-backed securities,
which were part of its bond-buying stimulus program.
Days before his conversation with the Medley analyst, Lacker voted against
increasing asset purchases at the Fed's September 2012 meeting.
Lacker said his interview in 2015 with the FBI also involved the United States
Attorney’s Office for the Southern District of New York, the Office of the
Inspector General of the Federal Reserve Board and the U.S. Commodity Futures
Trading Commission.
The Richmond Fed is one of 12 regional reserve banks that are part of the U.S.
central bank. They process payments and help regulate banks, while their
presidents take turns as members of the Fed committee that sets interest rates.
(Reporting by Jason Lange and Howard Schneider; Editing by Chizu Nomiyama and
Leslie Adler)
[© 2017 Thomson Reuters. All rights
reserved.] Copyright 2017 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
![](http://archives.lincolndailynews.com/2017/Apr/05/images/ads/current/Lincolnland_catering_sda_daily_SFARM_2017.png) |