The president of the Richmond Fed dramatically quit on Tuesday after disclosing that he was the leaker of sensitive information that triggered a criminal legal probe.
Jeffrey Lacker, who has been the head of the regional bank for 13 years, said he was a source of material for a report by Medley Global Advisors in 2012 on the central bank’s plans.
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At issue were key details of the Fed’s third round of asset purchases, known as QE3.
The Medley report, by Regina Schleiger, made several accurate predictions about some key missing details of the asset purchase plan agreed to by Fed officials at a meeting in the September 2012 that were not released to the public. At the time, the Fed said it could not tell how the reporter got the information.
“I deeply regret the role that I may have played in confirming…confidential information,” Lacker said in a statement.
Lacker said the Medley analyst “introduced into the conversation an important non-public detail about one of the policy options considered by participants prior to the meeting.” Instead of ending the call or refusing to comment, Lacker said the phone conversation continued.
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“When Medley published a report by the analyst the following day…it contained this important detail about one of the policy options and I realized that my failure to decline comment on the information could have been taken by the analyst, in the context of the conversation, as an acknowledgment or confirmation of the information,” Lacker said.
Additionally, he didn’t tell the Fed about the call the next day or when he was interviewed two months later by the general counsel, Scott Alvarez.
The leak became fodder for Congressional criticism of the central bank and sparked a series of probes and eventually a criminal investigation.
It took until 2015 — during an insider-trading investigation that included the U.S. Attorney’s Office and the Federal Bureau of Investigation, among others — that he disclosed the conversation with analyst. Lacker’s lawyer said the Department of Justice informed them no charges will be brought.
Lacker, a hawkish member who isn’t a voting member of the Federal Open Market Committee, had already announced his plan to retire in October. The Richmond Fed said First Vice President Mark Mullinix will serve as the bank’s acting president. Lacker became the Richmond Fed’s president in 2004.
“Once our bank’s board of directors learned of the outcome of the government investigations, they took appropriate actions,” the Richmond Fed said.
A spokesman for Joon Kim, the acting U.S. attorney for the southern district of New York, said his office would have no comment.
Schleiger referred a message to a spokesman, who said: “Medley Global Advisors is a journalistic organization that publishes in-depth macro policy coverage and analysis. Like all other journalistic organizations, reporting necessarily requires working with sources.”
In a statement, the Fed said it cooperated fully with the law enforcement investigation.
“We appreciate the diligent efforts made to bring this matter to its conclusion,” the statement said.