The Department of Labor’s move to restrict how journalists transmit market-sensitive economic data risks disrupting financial markets, Senator Roy Blunt said.
In a letter to Secretary of Labor Hilda Solis, Blunt, a Missouri Republican, objected to the agency’s plan to have media organizations remove from the department computer software, hardware and communications lines used to transmit news on data such as the unemployment rate and consumer prices.
“Given the market-moving impact of these numbers and the largely automated processes of today’s market institutions, even a minor flaw in the timing or accuracy of this data could result in a destructive impact on global markets,” Blunt wrote in his letter, dated today.
Reporters in so-called lockups are given data in advance of its release to the public, allowing time to prepare stories using their own hardware, software and data lines. The new system would force journalists, including Bloomberg News reporters, to use government-provided equipment and Internet access, with no guarantee they can send their stories at exactly the same moment.
“I am deeply concerned that the new policy proposed by DOL will not only result in the degradation in the quality of information the American people receive on the economy, but also represents a fundamental threat to the media’s First Amendment rights and a disturbing retreat from the government transparency that the Obama administration so often touts,” Blunt wrote.
Jesse Lawder, a Labor Department spokesman, didn’t immediately respond to a telephone call and an e-mail message seeking comment.
Blunt urged the agency to solicit public input on the proposed changes, saying that “a period of public consultation that affords the media, investors and other concerned Americans an opportunity to examine these issues is absolutely essential to any proposed changes,” he said.
More than 39,000 E-Mini S&P 500 contracts worth $2.7 billion traded on the Chicago Mercantile Exchange in the five minutes after the Labor Department released its February employment report March 9, data compiled by Bloomberg show. The value was more than nine times the average of $290 million for five-minute intervals in the past decade, the data show.
In the five minutes after the release of the March report on April 6, more than 45,000 contracts worth about $3.2 billion traded, almost 13 times the decade average, the data show. The E-Mini is the most popular futures contract tracking the benchmark gauge for American equities.
Blunt asked Solis to explain the purpose of the changes, flaws in the current system as well as measures the Labor Department would take to protect the new process from a failure or a cyber attack.
Bloomberg News, which participates in the lock-ups along with news organizations including Thomson Reuters, the Associated Press and Dow Jones Newswires, has written to the Department of Labor opposing the changes.
The department has said it can’t promise journalists they will be able to transmit market-sensitive economic releases at exactly the same time under changes resulting from the first review of procedures in a decade.
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