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Did NY Fed President ‘Blab’ During a Blackout?

April 11, 2017

Nine days ago, professional golfer Lexi Thompson was leading an LPGA Major golf tournament when he was given a 4-stroke penalty. One day earlier, a TV viewer advised tournament officials by email that that Ms. Thompson appeared to have committed a rule infraction. Sure enough, replays confirmed that Ms. Thompson had replaced her ball in the wrong place on the 12th hole putting green - and she was assessed a 4-stroke penalty on Sunday, one day after the infraction. Ms. Thompson ended up losing the tournament.


THE STORY.    NYPost columnist John Crudele writes today that, in 2011, he caught William Dudley, president of the New York Federal Reserve Bank, in meetings he wasn’t supposed to have with some of Wall Street’s top players. While Mr. Crudele admitted that he did not attend those meetings, and was not told what had been discussed, he did note that, during these blackout periods Fed officials are supposed to clam up - and make no public pronouncements - which he assumes would cover Dudley’s informal dinners.


And, for good measure, he added that, at the time, “nobody cared.” So, what prompted Mr. Crudele to bring up his 6-year old observations?


“I am mentioning this because the head of the Richmond, Va., Fed, Jeffrey Lacker, abruptly resigned last week for doing far less bad than Dudley might have done.


In his admission, Lacker says he took an October 2012 phone call from an analyst at an investment advisory firm and had a conversation about something the Fed was considering -  the purchase of $40 billion worth of mortgage bonds - to try to help the economy. Much of that information had already been in the newspapers but, still, Lacker’s conversation was useful to the analyst, who issued a report to his clients the next day. Mr. Lacker also noted that a “separate investigation” was conducted into so-called leaks from within the Federal Reserve.


It is Crudele's hope that, based on today's disclosures, “investigators now know where to look.”


TAKE AWAY.    Like it or not, this is the Age of Interactive Media, where non-participants can have an impact on events. What is unfortunate, however, is the frequency with which non-participants can shape history based on so-called "Alt News."