Bankers an asset on Fed's regional bank boards -Kocherlakota
MINOT, N.D. |
MINOT, N.D. Aug 15 (Reuters) - Allowing bankers to serve on the boards of regional Federal Reserve banks poses no conflict of interest and indeed gives policymakers access to critical economic information as they weigh future action, a top Fed official said on Wednesday.
Members of the regional Fed boards, bankers or otherwise, have no say in the Fed's supervision of banks, Minneapolis Fed President Narayana Kocherlakota said in remarks prepared for delivery to a group of businesspeople in Minot, North Dakota.
Kocherlakota did not air his views on monetary policy or the economic outlook in his prepared text.
His remarks come against the backdrop of proposed U.S. legislation to bar bankers from serving on the boards of the Fed's 12 regional banks. The bill's sponsors say the practice poses dangerous conflicts of interest that are highlighted by regulators' failure to detect a huge trading loss at JPMorgan Chase & Co earlier this year.
Jamie Dimon, JPMorgan's chief executive, is a board member of the Federal Reserve Bank of New York, which regulates his bank. Senator Bernie Sanders, an independent and one of the bill's sponsors, at the time called Dimon's position a clear example of "the fox guarding the hen house."
"Supervisory matters are not a part of the business of the board of directors," said Kocherlakota, who this week is taking his board - including three bankers - on a fact-finding tour of North Dakota's booming oil patch.
Bankers' participation on the regional Fed board is valuable because they can speak to credit conditions and general business conditions, "precisely the kind of information that policymakers need to do their job, whether under extraordinary or normal economic conditions," Kocherlakota said.
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