Who Checks the Checkers?

Senator Rob Portman (R, OH), in his capacity as Ranking Member of the Senate’s Committee on Homeland Security and Governmental Affairs, released a report detailing a decade-long effort by the People’s Republic of China to infiltrate the Federal Reserve system. The report concluded, in part, that

the Fed failed to mount an adequate response. The report’s findings show “a sustained effort by China, over more than a decade, to gain influence over the Federal Reserve and a failure by the Federal Reserve to combat this threat effectively.”

Of course, Fed Chairman Jerome Powell demurred from that report.

“Because we understand that some actors aim to exploit any vulnerabilities, our processes, controls, and technology are robust and updated regularly. We respectfully reject any suggestions to the contrary,” he wrote in a letter to Senator Rob Portman of Ohio, the committee’s top Republican.
Mr Powell detailed the central bank’s information security and background screening protocols, including reviews of foreign travel and personal contacts for staff who have access to restricted information. “We take seriously any violations of these robust information security policies[.]”

Of course. However, any procedure, no matter how robust or frequently updated, is only as good as the people executing the procedure. I have to ask: who does that vetting for the Fed? Who follows up on those travel reviews and contacts? What’s the Fed’s IG role in these procedures? How closely is the DoJ’s FBI involved?

That last, given the FBI’s demonstrated bias and too-often outright dishonesty, is especially important.

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