Fed clamping down on leaks to media and former workers
Published 14/07/2011 | 05:00
The US Federal Reserve, in a push to control the often wayward communications of its top officials, issued detailed rules on Tuesday dictating what they can and cannot do.
The US central bank has come under fire for speaking with a dissonant voice and sometimes allowing details of its highly market-sensitive policy meetings to leak to the media or former staffers.
The move is part of a broader effort at making the Fed appear less detached from public concerns following criticism during the financial crisis that policymakers were too kind to Wall Street at the expense of Main Street.
Last year, the Fed announced Vice Chair Janet Yellen would chair a subcommittee on communications aimed at clarifying policy on the matter. The report was a result of that effort.
"To the fullest extent possible, committee participants will refrain from describing their personal views about monetary policy in any meeting or conversation with any individual, firm, or organisation who could profit financially from acquiring that information," the Fed said in a statement.
In September 2010, Reuters chronicled a tendency for former employees to get special -- and lucrative -- access in a special report entitled 'The Ties That Bind at the Federal Reserve'.
That investigation found that individuals such as former Fed board governor Larry Meyer, of Macroeconomic Advisers, was using his access to gain private information and then selling it back to his consulting firm's clients.
The Fed's new rules addressed the issue quite directly. "Committee participants will strive to ensure that their contacts with members of the public do not provide any profit-making person or organisation with a prestige advantage over its competitors," the Fed communique said.
Some market participants, however, were sceptical that the rules could or would be adequately enforced.
"We shall see whether this set of rules is policed more effectively than the last one," said Stephen Stanley, economist with Pierpoint Securities.
"The emphasis seems to be on cutting off contact with individual market participants and consultants who can benefit or profit from obtaining inside information."
As part of the same evolution, Fed Chairman Ben Bernanke has begun holding quarterly press conferences -- unprecedented for a US central bank chief.