Protesters behind a banner with a picture of JPMorgan Chase CEO James Dimon outside the JPMorgan shareholders meeting on May 15, 2012, in Tampa, Florida. Dimon faces several calls to step down from the board of the New York Fed.
Don’t worry, Jamie Dimon. Even in the Facebook mess, you are not forgotten.
Kansas City Federal Reserve President Esther George on Thursday said in a press release that bankers who failed to uphold the “integrity, dignity and reputation” of the Fed are required by the Fed’s standards of conduct to step down from the board of the New York Fed, a key regulatory hub for Wall Street.
Though she didn’t call Dimon out by name, her statement comes at a time when several people have called for Dimon to step down from the New York Fed, including Democratic Massachusetts senatorial candidate Elizabeth Warren and, sort of,Treasury Secretary Tim Geithner.
Dimon, people with long memories (one week long) will recall, was recently placed in this hot seat for the $3 billion loss (and counting) that his bank, JPMorgan Chase, suffered as a result of lax regulation, which Dimon very vigorously argues should remain lax.
Dimon’s anti-regulatory fervor, while also overseeing a bank doing the sort of stuff that makes people want to, you know, regulate them, has led to questions about his suitability for the New York Fed board. Senators Bernie Sanders (I-Vt.) and Barbara Boxer (D-Calif.) have introduced a bill prohibiting any bankers from sitting on Fed boards at all.
“It is a blatant conflict of interest for Jamie Dimon, the CEO and chairman of JPMorgan Chase, to serve on the New York Fed’s board of directors,” Sanders said inintroducing the bill. “If this is not a clear example of the fox guarding the henhouse, I don’t know what is.”
George’s statement on Thursday seemed partly to be a response to the Sanders-Boxer thesis that all banks have a conflict of interest and therefore should be excluded from Fed boards. Her statement, entitled “Should Bankers Serve On Federal Reserve Bank Boards Of Directors?” suggested that bankers should serve on Fed boards, because of the expertise and market knowledge they provide.
But she also pointed out the various reasons Fed board members are required to step down, including “any action that might result in or create the appearance of affecting adversely the confidence of the public in the integrity of the Federal Reserve System.”
Again, George did not call out Dimon or his situation specifically, but Dimon arguably fits that description. It echoes the comments recently made by Geithner, who was once the head of the New York Fed, who said the bank had a “perception” problem. As former IMF chief economist Simon Johnson wrote at the time:
To officials, this is as clear a statement as is needed. As chairman of the Financial Stability Oversight Council, Mr. Geithner is ultimately responsible for the health of the financial system and its systemically important components. He is telling Mr. Dimon to go.
George seems to be saying something similar.
“There are high standards that apply to Reserve Bank directors, and when an individual no longer meets these standards, the director resigns voluntarily to allow someone who does meet the criteria to serve,” George wrote. “No individual is more important than the institution and the public’s trust.”
- Why is Jamie Dimon on a Federal Reserve board? (money.cnn.com)
- Tim Geithner: New York Fed Has A Jamie Dimon ‘Problem’ (huffingtonpost.com)
- Jamie Dimon Should Resign From the Board Of The New York Fed (baselinescenario.com)