Top Fed Official Resigns After Admitting to Leaking Confidential Information

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Leaking

After serving as the president of the Federal Reserve Bank of Richmond for 13 years, Jeffrey Lacker resigned abruptly after confessing that he leaked confidential information to an analyst of a financial firm in 2013. Since his resignation, he has been questioned by several law enforcement agencies, including the FBI.

“I crossed the line to confirming information that should have remained confidential,” Lacker wrote in a statement he issued through his lawyer, on Tuesday. His lawyer confirmed that the investigation is now complete and no charges are expected to be filed against Lacker.

“It’s a tragedy, it’s sad,” says Richard Fisher, former head of the Dallas Fed bank who served alongside Lacker. “I never dreamed Jeff Lacker would have done what he says he has done.”

Jeffrey Lacker admitted to have leaked information in 2012, when the Fed was taking extraordinary steps to allow the US economy to recover after the financial crisis of 2008. The Fed’s every move was being monitored closely by investors around the globe, who were trying to profit by finding out the specifics of the Fed’s actions.

The Fed made a decision to buy more bonds in September 2012, in order to pump more money into the economy and try to boost growth. This policy is known as quantitative easing three, or QE 3 in short. At that time, Lacker was the only person who voted against QE 3.

Lacker admits that he spoke with an analyst at Medley Global Advisors, an economic advisory firm based in New York. He shared details with the analyst on October 2, two days before the details of the Fed’s September meeting were released to the public.

According to an investigation later conducted by ProPublica, Medley Global send a report its clients, primarily hedge funds, with intricate details about the types of bonds the Fed had decided to buy. The report by Medley was sent a day before the Fed released details to the general public.

“I deeply regret the role I may have played in confirming this confidential information and in its dissemination to Medley’s subscribers,” Lacker wrote in his statement.

The Federal Bank of Richmond is one of the 12 branches of America’s central bank. Vice president Mark Mullinix is now the acting head of the Richmond Fed.

The Federal Reserve also released a statement saying that is fully committed to maintaining the security of confidential information. It reassured that the officials at the central bank “cooperated fully with the independent law enforcement investigation into an unauthorized disclosure in 2012.”