A Federal Reserve regional bank president on Thursday said board members should resign if they undermine public confidence in the central bank system.
In the wake of recent criticism of J.P. Morgan Chase & Co. Chief Executive James Dimon‘s role on the New York Fed board, Federal Reserve Bank of Kansas City President Esther George said in a statement that bankers have a “special obligation” to maintain the “integrity, dignity and reputation” of the central bank.
George didn’t mention Dimon by name and said that bankers do provide critical information to the regional banks and Fed officials about economic and credit conditions in their communities. She also noted that bankers serving on Fed bank boards do not play a role in supervising or regulating financial institutions.
Citing Fed standards, George emphasized that directors have a responsibility to avoid actions that cut into public confidence in the integrity of the system or use their position to influence regulations or supervision.
As far as I am concerned, the whole idea that the Fed can regulate its district bank stockholder/owners, who sit on its boards, is a farce. Look how well it worked in the past. Let’s end the Fed’s regulatory role and give it to a beefed up OCC with law enforcement powers. Let’s reward regulators for finding and prosecuting fraud instead of ignoring it and being complicit. – Lee Adler
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