Federal Reserve Bank Of New York’s Dudley Runs Into Disclosure Trouble

Federal Reserve Bank of New York Head William Dudley has violated code of conduct rules, reported Reuters.

Citing an investigation of potential conflicts of interest between the Federal Reserve Bank of New York and the financial firms it regulates, Reuters reported Dudley didn’t disclose that his half-sister was an employee of Wells Fargo.

Wells Fargo is under scrutiny from the Fed and other regulators due to its massive fake account scandal. The New York Fed said the lack of disclosure didn’t violate the ethics laws on the books in the U.S., didn’t impact the central bank and wouldn’t have resulted in Dudley needing a waiver or recusal.

However, it could serve to increase concerns that there are conflicts at the New York Fed, noted the report. In a statement to Reuters, William Dudley said his repeated omissions about his half-sister’s job starting all the way back in 2007 were not planned and are embarrassing. It’s particularly notable given the fact that Reuters reported Dudley has criticized bankers for years over ethics that were lacking and cultures that were not ideal. He’s even singled out Wells Fargo because of its fake account scandal mess.

While the Fed requires its employees to disclose potential conflicts of interest, it doesn’t bar siblings from working at financial firms that are regulated, noted the report.

Reuters speculated that the news report late last week could speed up efforts by Congress to provide more oversight of the Federal Reserve. One piece of legislation would result in the New York Fed presidential job needing approval from the Senate.

“Any information of this kind coming out late is highly problematic,” said Lisa Gilbert, vice president of legislative affairs at consumer rights advocacy group Public Citizen, which has urged Congress to investigate Wells Fargo in the Reuters report. The disclosure of the investigation into the New York Fed head is important so “they gain our trust and show us they are truly representing Main Street,” she said.