Magazine article American Banker

Fed Investigators Urge Probe of Former Senior Official

Magazine article American Banker

Fed Investigators Urge Probe of Former Senior Official

Article excerpt

WASHINGTON -- Federal Reserve investigators have asked the Justice Department to look into possible conflicts of interest by a former high-level Fed official.

The action, revealed in a recent report by the Fed's office of inspector general, came to light as in-house watchdogs were wrapping up a yearlong audit of possible conflicts by examiners and regulators.

Results won't be published until summer. But the report is expected to reveal some shortcomings in Fed policies governing central bank employees' financial dealings with institutions they oversee.

The inspector general referred this and a second conflict-of-interest case to the Department of Justice between last Oct. 1 and March 31.

Conflicts after Resignation

The first case, involving alleged post-employment conflicts by a senior official who had recently resigned, is still under review. The second, involving an allegation that a prohibited loan was made to an examiner, was sent back to the Fed for administrative action.

Four of the office's 14 professional auditors have been working full time on the conflicts-of-interest audit for more than a year, the inspector general, Brent Bowen, told American Banker.

Fed staff members will be briefed on the findings this Friday, Mr. Bowen said. Officials at the 12 Federal Reserve Banks have already received the results. The final report will include their responses.

Audit Begun Last Year

Mr. Bowen was on Capitol Hill Wednesday to brief lawmakers on the activities of his office, which was set up in 1987. …

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