Richmond Fed President Jeffrey Lacker Resigns After Admitting To 2012 Leak

Controversy has come calling at the doorstep of the Federal Reserve, with the Richmond Federal Reserve President Jeffrey Lacker calling it quits after admitting to leaking information about the deliberations among Federal Open Market Committee members in 2012.

The statement by Lacker said his conduct in 2012 was inconsistent with the confidentiality policies put in place to protect the deliberations of the FOMC and ensure the integrity of the financial markets.

The fed official revealed that in a phone conversation with an analyst working for Medley Global Advisors, which publishes macroeconomic policy intelligence for institutions such as hedge funds and asset managers, he happened to flout the confidentiality policy with respect to the proceedings at the September 2012 FOMC meeting.

Tight-Lipped

Instead of declining to comment on the policy options considered by the participants ahead of the meeting, Lacker neither refused nor expressed his inability to comment. Additionally, Lacker said he didn't report to the Federal Information Security Policy that the analyst is in possession of confidential information.

Later, when the analyst published a report on October 3, 2012, Lacker realized it contained details of one of the policy options and that the analyst had taken his failure to decline to comment as acknowledgement of the information.

Lacker expressed remorse over the development. He also disclosed that he was interviewed the General Counsel of the FOMC on December 10, 2012 after he gave a written response to a questionnaire issued by the body. In neither of the instances, he had revealed that the analyst was in possession of confidential information.

The leak was first uncovered by Bloomberg reporters Craig Torres and Jake Bernstein in a 2014 story. It was indicated then that the Medley report published on October 3, 2012, a day ahead of the release of the FOMC minutes, would have helped Medley profit from a decline in the U.S. treasuries.

Lacker's Clout

Lacker was set to relinquish office by September. The Richmond Fed said in a statement, "We are focused on moving forward within our organization—and were already underway with our presidential search, following Jeffrey Lacker's announcement in January to retire in 2017. This search process will continue as scheduled. In the interim, First Vice President Mark Mullinix is serving as the Bank's acting president."

Lacker is a non-voting member of the FOMC, the monetary policy setting arm of the Federal Reserve. According to ranking by Bloomberg, Lacker is one of the least influential member of the FOMC. Josh Zumbrun of the Wall Street Journal said the early resignation wouldn't mean much for monetary policy. He was a hawk, meaning one who prefers monetary policy tightening.

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