Head of the Richmond Federal Reserve Jeffrey Lacker resigns after information leak scandal

 
Jasper Jolly
The Federal Reserve Begins Last Meeting Of 2008
The former head of the Richmond Federal Reserve had previously participated in monetary policy discussions at the Federal Reserve (Source: Getty)

A powerful Federal Reserve official has resigned after he admitted to sharing confidential information about US monetary policy.

Jeffrey Lacker, head of the Richmond, Virginia, branch of the Federal Reserve, said in a statement he had confirmed a detail from a 2012 meeting of the interest rate-setting Federal Open Market Committee (FOMC) to an analyst from Medley Global Advisors, a macroeconomic policy research provider.

Lacker's resignation takes effect immediately. A non-voting alternate member of the FOMC, Lacker had intended to resign this year after being in the role since 2004. He was known as a more hawkish member of the FOMC, favouring higher interest rates.

Read more: The Fed has hiked interest rates, sending the dollar tumbling

Lacker's replacement as Richmond Fed president is currently set to be a voting member on the rotating FOMC.

The FOMC operates under strict confidentiality rules, with every word of reports from its regular meetings scrutinised for clues to the central bank’s plans.

Lacker said: “In 2012 my conduct was inconsistent with those confidentiality policies.”

The Medley analyst “introduced” a confidential detail into conversation on which Lacker did not refuse to comment as is required. The detail, which Lacker’s statement did not specify, was then reported by the analyst.

Read more: Is the US economy ready for higher interest rates?

Lacker said: “I deeply regret the role I may have played in confirming this confidential information”.

He added: “In this episode, as in all of my communications with analysts, journalists and the public, it was never my intention to reveal confidential information.”

In a statement the Richmond Federal Reserve said: “The Federal Reserve places a high priority on safeguarding information. We expect every employee to comply with all relevant policies and procedures, as well as our standards of conduct. Employees must review and acknowledge our policies annually. Once our Bank’s Board of Directors learned of the outcome of the government investigations, they took appropriate actions.”

“We are focused on moving forward within our organization—and were already underway with our presidential search, following Jeffrey Lacker’s announcement in January to retire in 2017."

The Richmond Fed's first vice president, Mark Mullinix, has taken over as the Bank’s acting president, it said.

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