Fed Watchdog Sounds Alarm on Confidential Info Sharing at Regional Banks

The Federal Reserve's internal watchdog has raised concerns about the sharing of confidential nonpublic information with its regional reserve bank boards. The Office of Inspector General report found instances where board members were briefed by policymakers prior to or immediately after policy meetings, potentially granting them access to sensitive information.

The report highlighted an instance in 2015 when a New York Fed president discussed projected inflation trends and emerging global economic uncertainty with directors one day after a policy meeting. The inspector general questioned whether this discussion could have covered nonpublic confidential information.

The watchdog also recommended that regional banks using external search firms to identify candidates should monitor and disclose any potential conflicts of interest between the firms and the candidates. Currently, there is no requirement for banks to report these conflicts.