Head of New York Fed doesn’t know when to keep mouth shut

Back on Jan. 6, 2011, I explained in a column that Bill Dudley, the head of the New York Federal Reserve Bank, was breakin꧃g Fed rules by meeting with Wall Street executives during the bank’s blackout period.

I’m re-running portions of that column because suddenly Congress seems to care. Sen. Elizabeth Warren (D-Mass.) held a hearing recently and acted incensed because Dudley appears to be going easy on Goldman Sach�♔�s and other Wall Street firms.

Thaꦗt notion came 🔥from recordings made by then-Fed employee Carmen Segarra.

The fact that Dudley Do-Wrong is a former Goldman executive made the suspicionsܫ even more cre𝔍dible.

Sen. Warren♋ doesn’t know the half of it. So I sent her staff a copy of the column.

In it, I wrote that Dudley didn’t know when to keep his mouth shut even if the entire Federal Reserve regularly observes what it calls a “blackout period” starting one week before 🃏Federal Open Market Committee meetings and lasting until the Friday after those meetings.

In case you don’t know, FOMC meetings🤡 are where ꦦthe Fed decides whether to change interest-rate policy.

But there is⛦ also a communiqué released just hours after the meeting ends in which the Fed gives its view of what the economy is doing. It might also in this communique hint at unusual moves it might undertake — like quantitaꦍtive easing.

Once it is released, t🌄hat statement goes through a word-for-word analysis by everyone who follows the markets. At times, just a whiff of something changing is enough to se🌳nd markets soaring or collapsing.

That’s why the Fed muzzles its members. The form on which outside organizations can request a Fed speaker says, “Please be advised that there are timin♛g restrictions — including FOMC blackout periods — for c♍ertain types of speeches.”

Dudley seems to have his own rules about🥀 talking to people during the blackout period.

Back in late 2010, Dudley’s office released his daily work schedule for the previous two years. That schedule shows Dudley isn’t shy about talking during those blackout periods with people on⛄ Wall Street who might benefit♕ from his knowledge.

Take March 11, 2009, for example. The blackout period ran from March 10 to 18. I know this because those dates are written in capital letters — PRE-FOMC BLACKOUT PERIOD — right at the top of 🦂Dudley’s calendar f🗹or that day, a reminder, I guess, from his assistant.

Remember, the finওancial markets were in disarray back then and the FOMC was meeting on March 17 and 18 to figure out what to do. No speeches were aಞllowed, I wrote back in 2011.

Still, Dudley d🍒ecided to have an “informal meeting” from 6 p.m. to 7 p.m. on March 11 with Goldman Sachs Chief Economist Jan Hatzius at the Pound and Pence restaurant near the New York Fed’s headquarters, my column said.

I have to give you some factoids here. Since Dudley was an executive with Goldman before he joined the Fed, he and Hatzi♔us could very well be friends who were talking about their kids’ plans for spring break.

But, sti⛎ll, there was a blackout period in effect. And a slip of the tongue by Dudley could have given Hatzius and Goldman valuable information. Even a pained expression 𝕴on Dudley’s face could have told Hatzius too much.

I called the New York Fed and asked for a clarification of the blackout rules. Wh♋at I wanted to know: Was the rule only for speeches? Could it be possible that private meetings that could benefit small groups are allowed but not public speeches that might help all investors? And what is the penalty for violations?

The Fed never called me back.

There was another blackout period from April 21 to 28, 2009. On April 22, one day into the blackout period, Dudley ꦛheld a conference call at 9 a.m. with Jamie Dimon, the head of JPMorgan Chase. At 11:30 a.m., there was a meeting with Jeffrey Carp, executive vice president and chief legal officer of State Street Capital.

T✨here were apparently others at that meeting because there was a notation “et al.” accompanying that meeting. At 1:15 p.m., Stuart Bohart, the c🧸o-head of Morgan Stanley’s asset management unit, had lunch with Dudley in the New York Fed’s Washington Room. And at 3 p.m., John Mack, the then-head of Morgan Stanley, met with Dudley for 45 minutes in Dudley’s office.

I looked through some 460 pages of Dudley’s schedule and on Dec. 11, 2009, for instance, Dudley had a breakfast meeting with Goldman Chief Executive Lloyd Blankfein and that company’s chief financial officer, David Viniar. The Fed’s blackout period had begun three days earlie൲r and lasted until Dec. 16.

Goldman is a primary dealer in government securities, so lower-level discussion𝕴s with the Fed probably occur frequently. But a breakfast meeting? At The Fed? At a time when Dudley was preparing for an FOMC meeting and wasn’t supposed to be tipping his hand in public?

So now I am asking: If the meetings 💎I described above in 2011 were ꦬa regular occurrence before or after this column ran, then Dudley will not only be guilty of poor oversight of Wall Street, but also aiding insider trading.

Let’s hope Sen. Warren takes the time💞 to pursue the leads I’ve given her.