Banking

Richmond Fed president Lacker resigns over leak of sensitive information

Jeffrey Lacker, President of the Federal Reserve Bank of Richmond, discusses the economy with Bank of America CEO Brian Moynihan at a Charlotte Chamber event in December 2016.
Jeffrey Lacker, President of the Federal Reserve Bank of Richmond, discusses the economy with Bank of America CEO Brian Moynihan at a Charlotte Chamber event in December 2016. dlaird@charlotteobserver.com

Richmond Federal Reserve President Jeffrey Lacker announced his immediate resignation Tuesday, acknowledging that he had improperly discussed sensitive information involving Fed policy with an analyst in 2012.

Lacker, a frequent dissenting voice at the central bank who criticized financial industry bailouts, had announced in January that he was retiring in October. He had served in his current role since 2004, overseeing a territory that included the Carolinas and examiners who monitored big banks such as Charlotte-based Bank of America.

Fed monetary policy decisions can play a critical role in the economy and in financial markets, so all non-public information is closely guarded.

In a statement Tuesday, Lacker said he spoke on Oct. 2, 2012, with an analyst with Medley Global Advisors, which publishes research on economic policy for hedge funds and other institutions. In the conversation, the analyst brought up an “important non-public detail” that had been discussed by Fed officials before their September meeting.

“Due to the highly confidential and sensitive nature of this information, I should have declined to comment and perhaps have ended the phone call,” Lacker said. “Instead, I did not refuse or express my inability to comment and the interview continued.”

When Medley published its report the next day, Lacker said he realized that his failure to decline comment could have been taken as confirmation about the detail.

During an internal Fed investigation in December 2012, Lacker said he did not disclose that the analyst was in possession of non-public information during his conversation with her. Later in 2015, when he was interviewed by the U.S. Attorney’s Office in Manhattan, the FBI and other agencies, Lacker said he did disclose this fact.

“I apologize to my colleagues and to the public I have been privileged to serve,” Lacker said in the statement. “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.”

An attorney for Lacker, Richard Cullen of McGuireWoods, said he has been informed that the investigation of Lacker is complete and no charges will be brought against him.

In a statement Tuesday, the Federal Reserve Bank of Richmond said it places “a high priority on safeguarding information,” adding that it expects “every employee to comply with all relevant policies and procedures, as well as our standards of conduct.”

Once the bank’s board of directors “learned of the outcome of the government investigations, they took appropriate actions,” the bank added.

The Richmond Fed said it’s moving forward the presidential search that was already under way. In the meantime, First Vice President Mark Mullinix is serving as the bank’s acting president.

Members of Congress have sharply criticized the Fed for not providing information regarding its investigation into the matter. House Financial Services Committee Chairman Jeb Hensarling, R-Texas, had been sharply critical of the Fed’s refusal to provide information on the investigation.

Fed Chair Janet Yellen in 2015 had told the committee that she was unable to provide some documents sought by 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 Associated Press contributed.

Rick Rothacker: 704-358-5170, @rickrothacker

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