Janet Yellen must have some real quacks for personal attorneys who deserve to be disbarred for counseling her to commit felony contempt of Congress in refusing to hand over documents subpoenaed by the House Financial Services Committee relating to the 2012 leak of information from the September FOMC meeting to Medley Global Advisors.
In her letter to Hon. Jeb Hensarling, the Financial Services Committee Chairman, responding to the subpoena, Yellen cited an ongoing criminal investigation by the OIG and the Department of Justice as a reason for not handing over the report from the Fed’s own internal review of the leak as well as documentation relating to communications with Medley Global Advisors by current personnel, stating that she has been informed that documents involved in investigations by the executive branch are exempt from Congressional subpoenas.
There is a bit of a problem with the reasoning, however. I referenced the wiki page for Contempt of Congress and nearly all of the citations listed since 1975 were declared for members of the executive branch. In most of those cases, the subpoenaed documents were ultimately handed over before the citation went to a floor vote – except for Atty. Gen. Eric Holder. In that case, it’s pretty difficult to compel the U.S. Attorney of the District of Columbia to prosecute his or her boss and Holder remains cited for contempt with virtually no consequence. It’s a weakness in the system.
Nevertheless, it is a bit problematic for Janet Yellen due to the fact that the Federal Reserve Board is not a part of the executive branch and has virtually no separation of powers leg to stand on. And I have to ask, just how much political capital is Loretta Lynch willing to expend to protect Janet Yellen and her Wall St. cohorts from the Congressional inquiry? Whatever resistance Lynch may initially put forward is likely to melt away when the situation comes into public awareness. It just wouldn’t enhance the Administration’s political credibility to have the appearance of helping to cover up suspected corruption on Wall St.
Additionally, Yellen has put herself bit of a pickle politically because of the outward appearances of the matter at hand. To people like me who are on the side of cynical and already suspicious of corruption within the Federal Reserve, both in and outside of the BoG, it is entirely a demonstration that those at the Fed believe they are exempt from the same laws that the rest of us mere peons have to follow. Yellen appears to believe that she can just blow off the Congress without consequence. Who does she think she is?
And it’s a much larger situation for the Fed than simply attempting to obstruct a Congressional investigation, which is pretty large in its own right. But there has been political rumblings of a need to reform the Fed from an accountability point of view for quite some time that to now has remained nebulous. I really wouldn’t be surprised if this development happens to nudge the rumblings over the edge toward congealment into something material. I certainly hope it does because reform is very much needed; if for no other reason than to send the message to the Fed that no matter what its member believe it is, nobody is above the law.
PS: Remember what happened to Richard Nixon who got caught in a cover-up? Apparently memories in D.C. are pretty short…
Here is what Ford had to say about what they did to someone who was elected. Do we really think an unelected bureaucrat exercising Congressional power delegated to institution she represents should get away with the same? His speech is a particularly interesting starting at about 4:30 and 7:10.
PPS: From the article linked above:
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.