Federal Reserve

Yellen shrugs off Congressional demand to turn over documents

Federal Reserve Chair Janet Yellen is balking at turning over some of the documents ordered by a key House lawmaker in his investigation of a possible leak of market-sensitive information.

Yellen has told Rep. Jeb Hensarling, R-Texas, who heads the House Financial Services Committee, that she can't provide some documents sought by his subpoena because doing so could jeopardize a criminal investigation by the Justice Department and the Fed's watchdog inspector general. Yellen said the inspector general has told the Fed that the documents in question — which include records related to an earlier internal review by the Fed's general counsel — should not be provided.

"The Federal Reserve is mindful that we must not impede that open criminal investigation," Yellen wrote in a letter to Hensarling Thursday.

The move escalated a months-long battle between the Fed chair and the lawmaker over an alleged leak in 2012 of interest-rate information to a financial newsletter.

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Hensarling, a vocal critic of the Fed, issued a subpoena to the central bank last month, saying it had repeatedly failed to adequately respond to the panel's questions and requests for documents. He has said that his committee is trying to determine whether or not the Fed's probe was dropped at the request of several members of its policymaking body.

The Fed told the committee in March that its own investigation found no evidence that sensitive information was deliberately leaked from the September 2012 interest-rate policy meeting. Any disclosure of information on Fed policymakers' views appeared to have been "unintentional or careless" and did not contain details of policy proposals, the Fed concluded.

An aide to Hensarling said the central bank has "not provided a valid legal justification for its failure to provide complete and adequate responses to the committee."

"The Fed once again is acting in a manner that can only be characterized as resistant to accountability, transparency and oversight," Jeff Emerson, an aide to Hensarling, said in a statement.

Yellen disclosed last month that she met once in 2012 with Regina Schleiger, a senior managing director of Medley Global Advisors, which publishes the newsletter. Yellen was the Fed's vice chairman at the time.

But Yellen said the meeting occurred several months before the private Fed discussions at issue took place, and dealt with general economic matters. The meeting was months before the newsletter's Oct. 3 report that said the Fed policymakers had reached a consensus on launching an additional round of bond purchases to stimulate economic growth, Yellen noted.

Details in the newsletter about the private Fed discussions were confirmed when the Fed released its minutes on Oct. 4.