Geithner disputes allegation he flagged rate cut -magazine

NEW YORK (Reuters) - Former Treasury Secretary Timothy Geithner, in an interview published this week, defended himself against an allegation that he leaked information about a pending interest rate cut in 2007 when he led the Federal Reserve Bank of New York.

"I would never, ever, ever put myself in a position where I was disclosing material information about a policy thing ahead of time," Geithner told New York Magazine.

The allegation, made by Richmond Fed President Jeffrey Lacker five years ago and repeated this month, has hung over Geithner since the U.S. central bank released transcripts this month of its 2007 policy meetings.

According to the transcript of a conference call Fed officials held on August 16, 2007, just as the financial crisis was escalating, Lacker said he had heard from Bank of America's then-Chief Executive Ken Lewis that Geithner and Lewis had discussed a reduction in the so-called discount rate.

Lacker reiterated the allegation in a statement after the transcripts were released on January 18. If Geithner had indeed flagged a rate change, such a conversation between a Fed policymaker and a bank CEO would likely violate strict central bank rules on confidentiality.

Geithner, who stepped down from the Treasury on Friday, denied the allegation on the conference call. Since the transcripts became public, Geithner, the Treasury, the Fed and the New York Fed have all declined multiple requests for comment.

According to the magazine, Geithner, who left the Fed for the Treasury in 2009, suggested in the interview that Lewis may have been extrapolating from their conversation.

"When you are the president of the New York Fed, part of your job is to be close to the market," he was quoted as saying. "It is not possible to do that job locked in a cage of silence and darkness."

The constant communication with the market "creates that risk, that you are vulnerable to that perception. I don't know how you avoid that," Geithner said.

The Fed's interest rate decisions are extremely market sensitive and can easily move asset prices globally. Early access to decisions could give banks and others enormous trading advantages.

The Richmond Fed, where Lacker remains president, directly supervises Charlotte, North Carolina-based Bank of America.

(Reporting by Jonathan Spicer; Editing by Dan Grebler)