The chairman of the influential House Financial Services Committee announced late Thursday that he’d issued a congressional subpoena to the Federal Reserve for what he said what a failure to comply with document requests.
Chairman Jeb Hensarling, R-Texas, wants the Federal Reserve and its chair, Janet Yellen, to share with the committee documents about an apparent leak of market-sensitive deliberations from the rate-setting Federal Open Market Committee.
Yellen confirmed at her last press conference in Marchx that the Fed has been looking into reports that a private financial newsletter put out by Medley Global Advisers.
“It has been reported that our Inspector General is engaged in a review at this time of this matter, and in light of that ongoing review, I’m not going to get into details,” Yellen said at the time. “With respect to Congress, congressional inquiries—we have arranged to brief members of Congress who’ve asked about this, and we’ll certainly cooperate in trying to provide them the information that they seek.”
The leak, first reported by Bloomberg News last December, reportedly came out of October 2012 deliberations by the FOMC and non-public information was published by Medley Global Advisers in a client-advisory publication.
“It is unacceptable, illegal and corrupt for anyone at the Fed to deliver inside information that could provide a financial advantage to the privileged few and lead to the manipulation of financial markets,” Hensarling said in a statement announcing his subpoena. “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.”
The Texan, who has made no secret of his desire to have the Fed subjected to greater oversight, said the Fed was sent letters on Feb. 5 requesting information, and that it did not respond until March 25, answering a letter but providing no documents.
The Fed, he said, hasn’t provided any legally justification for failure to comply with the committee’s document request and has failed to provide “complete and adequate responses” to questions and requests.
Thus, said Hensarling, a subpoena “is a prudent and measured approach – entirely consistent with the rules of the committee and the House, and prior precedents established by both Republican and Democratic committee chairmen.”
A Federal Reserve spokeperson said late Thursday that “the Board’s Inspector General and the Department of Justice are investigating this matter.”
At her March news conference, Yellen pushed back on one angle of the leak. She shot down reports that members of the rate-setting committee quashed an internal probe into the matter before the Fed’s inspector general began looking at the matter.
“That is an allegation that I don’t believe has any basis in fact. I’m not going to go into the details, but I don’t know where that piece of information could possibly have come from,” the exasperated Fed chair said.