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WASHINGTON— Probes into the 2012 leak of sensitive Federal Reserve policy information are widening further, with a Senate committee scrutinizing a former Fed official nominated for a position in the Obama administration.

The Senate Finance Committee has been looking into whether the official, a Treasury Department nominee who worked as a top Fed economist at the time of the leak, relayed market-sensitive information from the Fed to policy research firm Medley Global Advisors, which in turn shared the details with its Wall Street clients, according to people familiar with the matter.

The Senate's expanded inquiry underscores the sensitivity with which lawmakers on Capitol Hill are treating the leak, which has already spurred investigations by a House committee, the Justice Department, market regulators at the Commodity Futures Trading Commission and the Fed's inspector general.

The aggressive scrutiny across Capitol Hill highlights tensions between lawmakers and the central bank. Republicans, in particular, are increasingly wary of the Fed's immense powers over the economy and financial system.

The Senate committee is looking into whether Seth Carpenter, a nominee for assistant Treasury secretary for financial markets, played a role in the 2012 leak. The panel is charged with approving nominees to senior-level positions at the Treasury Department.

A person familiar with the matter said Thursday Mr. Carpenter has told the Treasury Department he never had any contact with anyone at Medley. The person added that even before the nomination, both the Treasury and the White House looked into whether Mr. Carpenter was involved, including reviewing the findings of the Fed's inspector general, and found no evidence linking him to the leak.

Mr. Carpenter didn't respond to a request for comment on Thursday. Spokesmen for the Fed and White House declined to comment on the Senate inquiry.

The Fed conducted its own investigation in late 2012 and early 2013 that found a "few" Fed staffers had contact with Medley, according to a memo summarizing the investigation, but it didn't identify the people. The Fed has said it was unable to determine who provided information to Medley. Mr. Carpenter hasn't been accused of being the source of the leak.

Sen. Orrin Hatch (R., Utah), the Finance panel's chairman, has sought more information about the September 2012 episode from Fed Chairwoman Janet Yellen and from the Fed's inspector general, but has so far received few details, a committee spokeswoman said.

The spokeswoman wouldn't say if the committee's review of the leak has stalled Mr. Carpenter's nomination. It has been more than a year since Mr. Obama tapped Mr. Carpenter for the position, and the committee has yet to schedule a hearing on the nomination.

Mr. Carpenter "is going through the same bipartisan nomination process as every nominee referred to the Finance Committee," said spokeswoman Julia Lawless.

According to people familiar with the matter, aides with the Finance Committee have asked Fed officials for documents from the Fed's own internal investigation that may relate to Mr. Carpenter.

Those aides also have interviewed current and former Fed officials in an effort to determine if Mr. Carpenter was involved in the leak. Mr. Carpenter served as a senior associate director in the Fed's monetary affairs division at the time of the leak. He joined the Treasury Department in mid-2013, and was nominated in August 2014 as assistant Treasury secretary for financial markets, a role he has filled on an acting basis since early this year.

The continuing investigations focus on a critical meeting of the Federal Open Market Committee in September 2012, when policy makers voted to begin a new round of bond-buying to help stimulate the flagging economy. Mr. Carpenter was at the meeting, according to the minutes of the September 2012 meeting.

The Medley report included details that indicated that the author, analyst Regina Schleiger, had spoken with someone inside the Fed. The details would have been known only to a small group of senior Fed officials and staffers, according to the people familiar with the matter.

For example, the Medley report provided specific details about one of the policy options officials were considering, and said the Fed was likely to vote at its December meeting to begin monthly Treasury bond purchases of around $45 billion. The Fed did exactly that.

The Justice Department and Fed inspector general have opened a criminal investigation into the leak, and federal prosecutors in Manhattan have teamed up with the CFTC in a separate insider-trading probe.

Write to Kate Davidson at kate.davidson@wsj.com and Brody Mullins at brody.mullins@wsj.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

(END) Dow Jones Newswires

October 01, 2015 21:35 ET (01:35 GMT)

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