Hours before Federal Reserve Chair Janet Yellen was scheduled to hold a much-anticipated news conference, the chairman of the House Financial Services Committee released a letter accusing the central bank of ignoring a subpoena and blocking a congressional probe.
Chairman Jeb Hensarling, R-Texas, wrote to Yellen Wednesday, suggesting she is hiding behind a Justice Department probe to avoid answering questions from his committee about a 2012 leak of market-sensitive information to the investment firm Medley Global Advisers.
“The timing of the recent criminal investigation into the leak is suspect,” said Hensarling in the letter.
In a statement, the lawmaker complained of an alleged about-face by the Fed.
“Both the Federal Reserve and the Fed’s Office of Inspector General (OIG) told the Committee they had previously conducted and closed internal investigations but were unable to identify who leaked the information to Medley,” the statement said. “However, one month after the Financial Services Committee began its investigation into the matter, the OIG suddenly reopened its investigation and informed the Committee that there was now an open criminal investigation into the leak by the Department of Justice (DOJ).”
The Fed is hiding behind the criminal investigation by the Justice Department, the Texas lawmaker alleged, in order to keep Congress and its subpoena at bay.
“That investigation, however, is not a substitute for the Committee’s own inquiry, which serves legislative interests … rather than law enforcement,” the letter to Yellen said, warning lawmakers will continue “to investigate the mishandling of your respective investigations.”
Yellen was expected to be asked about the matter at a press conference Wednesday closely followed by Wall Street for signs that the Fed will, as early as September, raise its benchmark interest rate for the first time in more than nine years. That move, when it happens, will raise borrowing costs across the economy.