Committee questions Fed security after DOJ charges against a senior Fed economist; Powell says case 'taken very seriously'

Members raised a recent Department of Justice prosecution alleging that a senior Federal Reserve official shared nonpublic information with representatives of a foreign government.

Powell said he did not know the facts of the specific case but explained the Fed’s general practices: the system holds secret information about future policy and staff receive strict information‑handling instructions. “We take this case very seriously,” Powell told the committee, adding that the Fed conducts background checks on all employees and will review policies and controls as facts become clearer.

Why it matters: The Fed operates critical payment and policy systems where unauthorized disclosures could affect markets. Lawmakers sought assurance the Fed’s insider controls, access rules and vetting practices are robust.

Key points

- Scope of typical access: Powell summarized that staff typically see economic analysis and internal deliberations that bear on policy decisions; secrecy around future policy actions is why access is tightly controlled.

- Controls and follow-up: Powell said the Fed performs background checks before hire and applies strict information‑handling protocols. He told members that once facts are known, the Fed would reassess controls and brief the committee where appropriate.

Ending: Powell said he could not comment on the pending prosecution but that, once more information is available, the Fed would review any necessary changes to controls and brief Congress.