House lawmaker issues subpoena to Fed in leak probe

AP News
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Posted: May 21, 2015 8:01 PM

WASHINGTON (AP) — A powerful congressman is compelling the Federal Reserve to provide documents related to a possible leak in 2012 of market-moving interest-rate information to a financial newsletter.

Rep. Jeb Hensarling, the Texas Republican who heads the House Financial Services Committee, announced Thursday he had issued a subpoena to the Fed. The central bank has repeatedly failed to adequately respond to the panel's questions and requests for documents, he said.

The committee's Republicans are investigating whether confidential information was deliberately leaked from the Fed's interest-rate policy meeting in September 2012. The Fed told the committee in March that its own investigation found no evidence that sensitive information was deliberately leaked from the policy meeting.

Any disclosure of information on Fed policymakers' views appeared to have been "unintentional or careless" and did not contain details of policy proposals, the Fed concluded.

The Fed inspector general, which is an independent watchdog, and the Justice Department have been investigating the matter.

"We have provided the committee with information regarding a potential breach in 2012 of Federal Reserve policies protecting confidential information," Fed spokesman David Skidmore said Thursday.

Fed Chair Janet Yellen disclosed earlier this month that she met once in 2012 with Regina Schleiger, a senior managing director of Medley Global Advisors, which publishes the newsletter. Yellen was the Fed's vice chairman at the time.

But Yellen said the meeting occurred several months before the private Fed discussions at issue took place, and dealt with general economic matters. The meeting was months before the newsletter's Oct. 3 report that said the Fed policymakers had reached a consensus on launching an additional round of bond purchases to stimulate economic growth, Yellen noted.

Details in the newsletter about the private Fed discussions were confirmed when the Fed released its minutes on Oct. 4.

Hensarling, a prominent critic of the Fed, has said he understood that that the Fed's internal probe had been dropped earlier at the request of several members of the Fed's policymaking body.

"Despite the seriousness of this situation, the Federal Reserve has acted in a manner that can only be characterized as resistant to accountability and oversight," Hensarling said in a statement announcing the subpoena.

But Maxine Waters of California, the committee's senior Democrat, said Hensarling was politicizing the leak issue. That "will likely have a chilling effect" on the Fed inspector general's investigation by undermining the independence of that probe, Waters said in a statement.