Senator Reveals Specifics on the Fed’s Conflicts of Interest (The Nation)
June 12, 2012
By George Zornick
JPMorgan Chase CEO Jamie Dimon will appear before the Senate Banking Committee on Wednesday to answer questions about his bank’s risk management, or lack thereof—how was it that a too-big-to-fail institution took dangerous gambles that recently resulted in multibillion-dollar losses?
But there are deeper questions likely to come up as well. One is why Dimon is allowed to sit on the New York Federal Reserve’s board of directors, along with several other titans of finance. At the twelve regional Federal Reserve Banks, there are nine-member boards of directors. Six of the seats are selected by banks from the region—although, somewhat hilariously, the banks are supposed to pick three directors to represent their interests, and then three directors to represent “the public’s interest.”
But if the job of the Federal Reserve is to maintain the safety and soundness of Wall Street banks—a task often at odds with the banks’ short-term, greed-driven motives—why are the heads of those institutions allowed to be a part of it at all?
Some new data released Tuesday by Senator Bernie Sanders puts this inherent conflict of interest in sharp relief. Sanders revealed, for the first time, detailed information about which bank executives benefited from Fed actions during the financial crisis, and how much they got.
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Tags: Federal Reserve, Wall Street