Minutes of Fed Policy Meeting from 3 Weeks Ago - Who The Heck Cares?

[ by Howard Haykin ]

Minutes of the Federal Reserve's closed door policy meeting held March 19 and 20, scheduled for release at 2:00 p.m. Wednesday, April 8, were inadvertently released to a host of heavy Wall Street hitters and others, one day early.   At least 12 banks, a Wall Street law firm, a hedge fund and a private equity fund were among the privileged early recipients.  Also enjoying the head start were trade groups, lobbying firms and an Exchange. [ Their identities in a moment.]

The error created something of a stink, knowing that employees at such firms as JPMorgan Chase, Goldman Sachs, Wells Fargo, and Citigroup  were among those to receive the market sensitive information ahead of the rest of the world.  The Fed decided not to wait until 2 p.m. Wednesday to release the minutes to everyone else - the minutes went out at 9:00 a.m.

Among the Early Recipients.   According to CNBC, which obtained a list of recipients, some very big hitters were treated to an advanced copy. Here are many of the privileged few - by category:

Banks.    (i) Fifth Third, (ii) Citigroup, (iii) UBS, (iv) Barclays, (v) U.S. Bancorp, (vi) Goldman Sachs, (vii) Wells Fargo, (viii) HSBC, (ix) BNP Paribas, (x) BB&T, (xi) JPMorgan Chase, and (xii) PNC.

Law Firm.   Sullivan & Cromwell, one of the most powerful Wall Street law firms, received the early email with the minutes

Hedge Fund.   King Street Capital Management, a hedge fund with $20 billion under management.

Private Equity Firms.   The Carlyle Group and The Cypress Group.

Trade Groups.   The list included:  (i) The American Bankers Association;  (ii) the Independent Community Bankers of America;  and, (iii) The National Association of Realtors.

Lobbying Groups.   Rich Feuer Anderson and Roberts Raheb Gradler also received the email.

Other Financial Entities.    The Inter Continental Exchange and the European Central Bank.

Is the Fuss Justified?   Without regard to the fuss, the Fed Inspector General intends to investigate what happened. 

To begin, there haven't been any reports to indicate anyone who got the news a day early traded on the information.  That said, the minutes typically move the markets and Wednesday, 4/10 was no exception.  Once the minutes were there for everyone to see, they moved the financial markets - with stock markets rallying. The NYTimes wrote that traders focused on signs that Fed policymakers are committed to battling "a weak economy and soft labor market.

According to Michael Englund, chief economist of Action Economics, explains that "the markets are always looking for tiny morsels of information about what these guys are thinking."   The minutes offer a chance to see how Fed policymakers are "balancing their different views."   He adds:  "And any subtle changes can change perceptions in the markets."

For further details, go to:   [ CNBC, 4/10/13 ]