How is this even remotely acceptable?

Posted in Uncategorized at 8:46 pm


Reuters ran a story today detailing how an elite group of people, some of them former Federal Reserve employees, are given privileged access to monetary policy information, which they often then resell to select clients.

On August 19, just nine days after the U.S. central bank surprised financial markets by deciding to buy more bonds to support a flagging economy, former Fed governor Larry Meyer sent a note to clients of his consulting firm with a breakdown of the policy-setting meeting.

The minutes from that same gathering of the powerful Federal Open Market Committee, or FOMC, are made available to the public — but only after a three-week lag. So Meyer’s clients were provided with a glimpse into what the Fed was thinking well ahead of other investors.

A respected economist, Meyer charges clients around $75,000 for his product

Imagine if, instead of an economist, he was a financial advisor, and instead of confidential monetary policy information, it was confidential deal information provided to him by a friend who happens to be a managing director at an investment bank that was being sold.  We’d be treated to perp walks every night on the evening news.

Fed board staffers who retire even get to keep their pass for the central bank’s building, which boasts fitness facilities, a barber and a dining room.

Though their identification badges designate their “retired” status, they are not restricted to where they can go once inside the building — even if they now work in the private sector.

Seriously?  I can’t recall any of my previous employers allowing me to keep my employee badge and to come in and walk around whenever I want. On what planet is this an acceptable practice?

But critics question whether it is proper for Fed officials to parcel out details that have the potential to move markets around the world, especially with the government’s involvement in the economy being so pronounced.

“It’s certainly not what Fed officials should be doing,” said Alice Rivlin, a former Fed governor and now a fellow at the Brookings Institute think tank. “The rules when I was there were you don’t talk to anybody about anything that could be used for commercial purposes.”

People are questioning whether it’s proper?  There’s no question about it.  It is not.

Too often, the Federal Reserve believes that rules do not apply to them,” said Sherman at Salient Partners. “If we allow some to have access, then how are we different than those that follow ‘crony capitalism’ in the Third World?”


There’s a lot more to the story, and I suggest people read the entire report.  Given the importance of monetary policy, insider trading laws and Regulation FD ought to be expanded to include Fed officials and this type of information.


  1. Rdan said,

    10.01.10 at 9:42 am

    May I use this for Angry Bear?

  2. RueTheDay said,

    10.03.10 at 11:19 am

    Yes, absolutely.

  3. Balloon Juice » Blog Archive » Number one ain’t you said,

    10.10.10 at 12:08 pm

    [...] Rand Paul is right about the Federal Reserve (commenter liberal via Disequilibria, which excerpts this article but strangely links to a different [...]

  4. liberal said,

    10.10.10 at 1:22 pm

    That trackback from Balloon Juice was set off by yours truly.

    The blogger there pointed out that the link appears wrong.

    Also, what do you think of this apologia?

  5. RueTheDay said,

    10.10.10 at 4:01 pm

    I updated the link to point to the original Reuters story. Apparently ABC News re-uses urls or something.

    Regarding the comment you mentioned. I agree that the CURRENT Fed officials probably aren’t doing it for profit or even intentionally in many cases, but the former Fed officials are clearly profiting from it. The fact that some parties may be dupes does not excuse what is happening.

  6. liberal said,

    10.10.10 at 4:48 pm

    Thanks. That’s what I figured.

  7. Lunch Bags · said,

    11.12.10 at 5:28 pm

    abc news is of course one of the most reputable news sources these days ;.-

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