“Periodically, the Federal Reserve’s structure is debated in Congress, the public or the media. Recently, the question of whether it is appropriate for bankers to serve on the boards of the Federal Reserve’s regional Reserve Banks has once again been raised.”
So wrote Esther George, who has been for eight months the president of the Federal Reserve Bank of Kansas City, on Thursday in an unusual communication, a news release with the headline, “Should Bankers Serve on Federal Reserve Bank Boards of Directors?”
Usually regional Fed presidents and Federal Reserve governors communicate through speeches, not news releases…
Perhaps the omission is out of a sense of decorum. Here’s our answer: the question has arisen because James Dimon, the chief executive of J.P. Morgan Chase & Co., serves on the board of the Federal Reserve Bank of New York. In the wake of the huge trading loss suffered by J.P. Morgan, some have questioned why Dimon remains a New York Fed director, given the reputational hit and regulatory scrutiny provoked by the $2 billion or more trading loss.
A few comments I left over on the WSJ-
The bottom line is that the Fed should not be regulating its own district bank shareholders. Look at the great job they’ve done all along. Not.
The Fed’s District Banks should do an IPO to take out the banks altogether. I’m sure Nasdaq could handle it. With public ownership of the Fed banks, we’d have greater accountability. Look at JPM, a public company. They’ve been very responsible.
Hazmatt77 wrote :
While you’re at it why not prohibit cops from serving as Police Commissioners and lawyers shouldn’t be allowed to be politicians!
The police do not own the police department. And lawyers don’t own the government. The banks do. And the banks own the Fed. The Fed exists specifically to make sure that the banks stay alive and profitable. The idea that it can also serve as regulator is sick, as is the fact that no one questions this blatant conflict of interest.