Fed Leak Should Raise Questions Not Accusations

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If conspiracy theorists were hoping to score points with the early e-mail distribution of the Federal Reserve minutes yesterday, they had better look elsewhere.

Brian Gross, a member of the Fed's "congressional liaison staff" (i.e. a lobbyist), e-mailed a copy of the minutes from the March 19-20 meeting to his contact list at 2 p.m. on April 9, Bloomberg News reported. The minutes were scheduled to be released at 2 p.m. yesterday.

The Fed minutes used to be a real snooze in terms of moving the markets. That changed fairly recently, when the minutes revealed more concern about the benefits of additional quantitative easing than the post-meeting statement. (The minutes are released with a three-week lag.)

When the Fed became aware of Gross's error, it released the minutes publicly at 9 a.m. yesterday, with a half-hour nod to the media. The fact that Gross's distribution list included members of Congress, bank lobbyists and representatives of trade associations only added to the intrigue, but I suspect that was more a reflection of the nature of his job than anything else.

That doesn't mean the Fed is off the hook. We need to know who (inside the Fed) gets what (information) where (physically) when (how long before the official release) and why (for what purpose). What sort of constraints are placed on those with access to information? How is the information transmitted to them? What sort of safeguards are in place? The Fed, of all institutions, should hold its employees to the highest standards.

Even though Gross was acting on his own in distributing information to professional contacts, the Fed has asked its Inspector General to review all procedures surrounding the release of sensitive information. The Fed, along with the government's statistical agencies, already has procedures for releasing embargoed information to the media. It has a passive system for everyone else: Anyone can sign up on the Fed website to receive automated e-mails on information of one's choosing.

I don't know that anything the Fed says or does will convince the doubters. I'm comfortable with the idea Brian Gross was acting alone. If anything, his mistake sounds like an e-mail snafu I'd make, minus the sensitive information.

The more important questions, as all journalists know, are who, what, where, when and why. And those are for the Fed to answer.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.