ShareThis Page

Richmond Fed president resigns over role in leak of secret information

| Tuesday, April 4, 2017, 7:36 p.m.

WASHINGTON — Jeffrey Lacker, president of the Federal Reserve Bank of Richmond, announced Tuesday that he was resigning effective immediately after acknowledging improper discussions with a financial analyst that later became the subject of a lengthy investigation into leaks at the Fed.

In a statement, Lacker said that in October 2012 he spoke to an analyst at Medley Global Advisors who possessed “highly confidential” information about interest-rate decisions the Fed had considered at its September meeting. He said that after the analyst had introduced the information, he should have declined to comment, ended the call and reported to Fed officials that the analyst was in possession of confidential information.

Lacker called his conduct “inconsistent” with the Fed's confidentiality policies.

“I deeply regret the role that I may have played in confirming this confidential information and in its dissemination to Medley's subscribers,” Lacker said.

Lacker's attorney Richard Cullen said that Lacker had been informed that the investigation into his role in the Fed leak had been completed and no charges would be brought against him.

The Fed's inspector general, Mark Bialek, said in a statement that his office was concluding its leak investigation.

A separate statement from the Fed board said the central bank was committed to maintaining the security of confidential information.

“We cooperated fully with the independent law enforcement investigation into an unauthorized disclosure in 2012,” the Fed said. “We appreciate the diligent efforts made to bring this matter to a conclusion.”

But the House Financial Services Committee said in a statement that they have not concluded their own investigation into the leak.

“The Financial Services Committee takes this matter very seriously and our investigation is ongoing, which is why we have no further comment at this time,” said committee spokesman Jeff Emerson.

Lacker, who had already announced in January that he was planning to step down in October, said that he failed to disclose in a subsequent investigation in 2012 the full details of his conversation, specifically the fact that the analyst was in possession of confidential Fed information.

“The real problem for him is he didn't fess up to it. If it was just a mistake, you admit it,” said Peter Henning, a law professor at Wayne State University in Detroit who wrote a book about public corruption. “Certainly it's a blow to the Fed's credibility.”

The political fallout from the incident could be substantial, Henning suggested, providing more ammunition to the Fed's critics who say it can't be trusted.

Lacker said that when he was interviewed again in 2015 as part of investigations being conducted by the FBI, the Fed's inspector general and the U.S. Attorney's Office for the Southern District of New York, he did disclose that the analyst was in possession of confidential information.

“I have always strived to maintain the appropriate balance between transparency and confidentiality, but I regret that in this instance, I crossed the line to confirming information that should have remained confidential,” Lacker said in his statement.

Members of Congress including House Financial Services Committee Chairman Jeb Hensarling, R-Texas, have been sharply critical of the Fed's handling of the 2012 leak. Hensarling specifically complained about the Fed's refusal to provide information about the investigation to his committee.

Fed Chair Janet Yellen in 2015 had told the committee that she was unable to provide some documents sought under a committee subpoena because doing so could jeopardize a criminal investigation by the Justice Department and an on-going investigation by the Fed's inspector general.

The leak episode “draws further negative attention to the Federal Reserve at a time when members of Congress are already sharply critical,” said Mark Hamrick, senior economic analyst for Bankrate.com.

In a statement, the Richmond Fed said that it placed a “high priority on safeguarding information.” It said that once the bank's board of directors learned of the outcome of the government investigations, it had taken appropriate actions.

The statement said the bank's search process for Lacker's successor would continue. In the interim, Mark Mullinix, the bank's first vice president, will serve as acting bank president.

TribLIVE commenting policy

You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.

We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.

While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.

We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers

We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.

We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.

We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.

We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.