Tags: federal reserve | leak | policy | press

Fed Review Says Leak in One Case Was Unintentional, Careless

Tuesday, 24 Mar 2015 06:45 AM


The Federal Reserve said disclosures of confidential information about 2012 policy deliberations were unintentional and “careless,” and prompted recommendations about dealings with the press.

The probe was ordered by then-Fed Chairman Ben S. Bernanke in 2012 after the Wall Street Journal and Medley Global Advisors LLC described deliberations leading up to policy decisions at the Federal Open Market Committee meeting in September that year and in December.

The Fed’s own summary of the probe of the leak released Monday said that a Wall Street Journal reporter spoke with, in some cases “multiple times,” every reserve bank president, most members of the Board of Governors and “a number of staff members.” While the review didn’t disclose the name of the reporter, the Sept. 28, 2012, story was written under the byline of Jon Hilsenrath.

“These disclosures appeared to be unintentional or careless and none of the disclosures involved details of the FOMC policy proposals or actions,” the summary said.

The Fed’s summary said “nearly all” of the information in the Medley report appeared previously in the newspaper.

Yet there were significant differences between the two reports. The Wall Street Journal article was a review of how Bernanke lobbied Fed officials to re-start quantitative easing in September 2012. By contrast, the Medley note to clients was forward looking and telegraphed the addition of Treasury purchases in December 2012 and the introduction of a pledge to keep the benchmark lending rate at zero until certain economic conditions were met.

Policy Options

One of the policy options at the September meeting included “a proposal to denote conditional guidance around employment and inflation conditions,” the Medley analyst, Regina Schleiger, wrote in her note to clients.

The September 2012 FOMC meeting was a half-step toward what would become one of the most aggressive moves in U.S. monetary history. In December that year, the Fed added $45 billion of Treasury purchases and said it would keep the benchmark lending rate at zero “at least as long” as the unemployment rate remains above 6.5 percent and inflation was forecast to rise no more than 2.5 percent.

The Medley report was issued Oct. 3, a day before Fed minutes of the meeting were released, and said that they would show “the groundwork for further action in coming months has been laid.”

On a separate track from the Board’s probe summarized in Monday’s release is an independent Fed Inspector General investigation.

Criminal Investigation

House Financial Services Chairman Jeb Hensarling said March 13 that he had been informed by Fed Inspector General Mark Bialek that “there is currently an open criminal investigation” into the leak.

The summary released Monday shows the Board is “effectively concluding” their probe, said Gilbert Schwartz, a former Fed Board associate general counsel who is now partner at Schwartz & Ballen LLP in Washington.

With the inspector general’s investigation, “the saga continues,” Schwartz added. “What I find curious is how long this is taking.”

The IG has declined to comment on whether the probe covers the Wall Street Journal, Medley, or both.

Fed Chair Janet Yellen said at her FOMC press conference last week that she welcomed the IG’s review and is “looking forward to its conclusions.”

Gerard Baker, editor in chief of the Wall Street Journal said the Fed’s review “underscores the full depth and breadth of Jon Hilsenrath’s rigorous and accurate reporting.” Daniel Bogler, president of Medley Global Advisors, couldn’t be reached for comment.


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The Federal Reserve said disclosures of confidential information about 2012 policy deliberations were unintentional and "careless," and prompted recommendations about dealings with the press. The probe was ordered by then-Fed Chairman Ben S. Bernanke in 2012 after the Wall...
federal reserve, leak, policy, press
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Tuesday, 24 Mar 2015 06:45 AM
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