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Insider Trading and Central Banks


Are former Fed officials gaining access to secret information? ... In its story about the problem of former Federal Reserve officials gaining access to secret market-moving information at the central bank, Reuters has found a really good solution: Ben Bernanke should come out and give a press conference after each meeting of the Federal Open Markets Committee, which sets monetary policy. The European Central Bank holds a press conference after its key meetings that gives its president, Jean-Claude Trichet, a chance to explain the reasoning behind its actions in a public forum. "If Bernanke can't stop the leaks he ought to have a full press conference after the meeting. It's inappropriate for certain people to gain an advantage on information from the Fed," said Ernest Patrikis, a former No. 2 official at the Federal Reserve Bank of New York and now a partner at law firm White & Case. The story notes how some former Fed officials, like former Fed governor Larry Meyer, are talking to people at the Fed about the confidential internal discussions leading up policy decisions. Then, Meyer and other former Fed officials (and other people who haven't worked at the central bank but are close to its officials) write notes to their clients summarizing what they found out. For this, they get paid millions. – Market Watch

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