Lawmakers seek details of Fed leak probe
WASHINGTON • Two Democratic lawmakers are asking the Federal Reserve for details on its reported probe of a leak of market-sensitive information about interest-rate policy.
Sen. Elizabeth Warren of Massachusetts and Rep. Elijah Cummings of Maryland requested the information Thursday from Scott Alvarez, the central bank’s general counsel. The Fed’s investigation focuses on a 2012 leak of information on the closed-door internal deliberations of Fed policymakers, the lawmakers said in a letter. They cited several news reports in December.
The security of sensitive, market-moving information has increasingly become a concern for federal officials. Possible leaks of government data have led the Labor and Commerce departments as well as the Fed to impose tight procedures for distributing information early to reporters.
Ms. Warren and Mr. Cummings also asked for the Fed’s policies on maintaining confidential information and steps it has taken to prevent future leaks.
According to the lawmakers’ letter to Mr. Alvarez, details of confidential discussions of the Fed’s policymaking Federal Open Market Committee at its September 2012 meeting showed up in a financial intelligence newsletter that circulated among traders. The news reports said the sensitive information was included in the newsletter on Oct. 3, 2012, a day before the Fed publicly released its minutes of the September meeting. That would have given traders who received the information an unfair advantage to profit from the decline in U.S. treasury bond prices that occurred after the Fed released the minutes on Oct. 4.
Ms. Warren, a member of the Senate banking committee, recently assumed a Senate leadership post and has become the most prominent liberal Democrat in the country on economic and financial issues. Mr. Cummings is the senior Democrat on the House oversight and government reform committee.
“We are disturbed by this lack of transparency regarding such an important topic,” they told Mr. Alvarez. “This leak contained key market-moving information, violated Federal Reserve policy on disclosure, and may have represented a violation of federal law.”
In September 2013, the Fed indicated it was concerned about suspiciously heavy trading of gold futures following a meeting of the policy-making body, which may have been triggered by a premature release of confidential information.