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Esther George, president of the Federal Reserve Bank of Kansas City, defended the current structure of the central bank system, arguing that bankers should keep their seats on the boards of the 12 regional Fed banks.
May 24 -
The fallout of JPMorgan Chase & Co.'s $2 billion trading loss has reignited old worries of just how close Wall Street is to one of its top regulators, the Federal Reserve Bank of New York. Politicians and consumer activists have called for Jamie Dimon, JPMorgan's chairman and chief executive, to resign from his position as a board director at the New York Fed.
May 18
WASHINGTON — Federal Deposit Insurance Corp. board member Thomas Hoenig said directors with an appearance of conflicts should relinquish seats on Federal Reserve bank boards, according to a Bloomberg News report.
Hoenig's remarks, made during a Bloomberg Radio interview, came as a chorus of voices call for JPMorgan Chase & Co. chief Jamie Dimon to step down from the Federal Reserve Bank of New York's board.
"Directors, when they appear to have a conflict, that's when they should step down," Hoenig said in an interview Tuesday on the program "The Hays Advantage" with Kathleen Hays and Vonnie Quinn, according to a news report by the wire service about his remarks. Those Fed board members should give up their seat "for the perception of the integrity of the institution," he said, according to the report.
Formerly head of the Federal Reserve Bank of Kansas City, Hoenig became one of the more high-profile figures to weigh in on the issue since the $2 billion-plus trading loss at JPMorgan Chase's London investment unit reignited criticism over bank executives holding Fed seats and led to calls for Dimon to leave the New York Fed's board. The New York Fed is one of JPMorgan Chase's regulators.
Hoenig is one of five members on the FDIC board, and is the pending nominee to become the FDIC's vice chairman. He represents an agency that not only insures all bank deposits, including that of JPMorgan Chase, but that also has backup supervision over large Wall Street institutions.
Meanwhile, Simon Johnson, a professor at the Massachusetts Institute of Technology Sloan School of Management, submitted a petition this week to the New York Fed with 38,000 signatures calling for Dimon's removal from the board.
