Ever since JP Morgan revealed it’s $2 billion (and increasing) trading loss, many critics have called for CEO Jamie Dimon’s head. Many have also pointed to and questioned Dimon’s position on the board of directors of the New York Fed, saying that that a bank executive should not have so much influence over a regulatory agency.Yesterday, in an interview with PBS NewsHour, Treasury Secretary Timothy Geithner also chimed in on the issue, saying that although the argument many have made against Dimon is not new, it is something worth considering.
Here’s what Geithner told PBS’s Jeffrey Brown—
JEFFREY BROWN: One more question on this. This also sheds some light — you focus again on the seeming coziness between Wall Street and Washington. Elizabeth Warren, who helped set up the Consumer Protection Agency for the administration, now running for the Senate in Massachusetts — she said that Jamie Dimon, head of JPMorgan, should not be sitting on the board of the New York Fed, that that just – it isn’t right, because they help regulate those banks.
TIMOTHY GEITHNER: That’s not a new observation, not a new concern. It’s been made by many people over the last several years.
JEFFREY BROWN: Do you think it’s right?
TIMOTHY GEITHNER: I think it is true. And I think it’s a problem that that – the structure of the Fed, established 90 years ago, and it’s true for Federal Reserve banks across the country, creates that basic perception. And I think that’s something worth trying to change. But the American people should understand that although the Fed was set up that way, those banks and the members of the board play no role in supervision. They have no role in the writing of the rules, and they play no role in decisions the Fed makes about how to respond to a financial crisis. Their role is a much more limited role, and the role is to help provide a perspective on what’s happening in the economy as a whole. But I agree with you that the, that perception is a problem. And it’s worth trying to figure out how to fix that.
Dimon has explained his role in the New York Fed as purely an “advisory” one. His term on the New York Fed’s board is set to expire at the end of this year.
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