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Aug 29 (Reuters) - The Federal Reserve should beef up itscontrols over the handling of minutes for its policy-settingmeetings after the top-secret documents were inadvertentlyreleased a day early to a select group in April, the U.S.central bank's watchdog said on Thursday.
Fed Chairman Ben Bernanke asked for a review of the Fed'shandling of the documents after a staff member emailed minutesof the U.S. central bank's March policy meeting to more than 100congressional staffers and bank lobbyists on April 9, about 24hours ahead of their scheduled release.
The lapse was the Fed's worst security breach in years.Minutes of policy-setting meetings can have a major impact onglobal financial markets because they can give hints on futureFed action.
That said, the market reaction to the March minutes wasmuted, and several recipients of the email told Reuters they hadnot even realized they received it until the Fed publicized theerror.
The Fed should limit access to the minutes to board staffwho "have a need to know," and remove any staff who do not, theFed's Office of Inspector General said in its report.
The OIG's office also recommended the Fed develop writtenpolicies and better training to safeguard confidentialdocuments.
The Fed has begun to implement the OIG's recommendations, itsaid in a letter attached to the report, including a requirementthat emails regarding minutes contain only a brief note and alink to the Fed's public website, rather than an attacheddocument.
After discovering the breach early on April 10, the Feddecided to publish the minutes at 9 a.m. EDT (1400 GMT), or fivehours ahead of the scheduled release time.
Among those who received the minutes early were people withemail addresses that identified them as working for a number offinancial firms, including Goldman Sachs, BarclaysCapital, Wells Fargo & Co, Citigroup Inc,UBS and JPMorgan Chase & Co, which trade onnew information about U.S. monetary policy.
The staff member responsible for the breach told the Fed'swatchdog he was confused about the release date, andaccidentally sent the email a day early, the report said.
Fed officials met three days after the breach to fix someissues, including limiting the contact list for thecongressional liaison's office to government officials.
