Fed Watchdog Flags Departing Employee Over Sensitive Information

The Federal Reserve's internal watchdog has issued an alert about a departing employee who may have left the central bank with confidential material, pointing to what it describes as serious weaknesses in information security controls.

In the alert, the Fed's Inspector General said the case involves a Board employee who potentially removed classified and other sensitive information belonging to the Federal Open Market Committee. The same employee had previously been involved in an information security incident concerning FOMC information, the watchdog noted.

The Inspector General said the episode exposes information security risks along with breakdowns and deficiencies in controls that, in its assessment, demand the Board's immediate attention.

The alert does not identify the employee or specify what information may have been removed. It also does not detail the nature of the earlier incident involving FOMC material.

The FOMC is the Fed's policy-setting arm, and its deliberations and supporting documents are treated as highly sensitive because they can move financial markets and shape expectations about interest rates.