WASHINGTON, June 12 JPMorgan's chief executive,
Jamie Dimon, is not the only banker who was the director of one
of the Federal Reserve's regional banks while his firm drew
emergency funds from the Fed, Senator Bernie Sanders said on
Sanders released information provided by the Government
Accountability Office showing representatives of 18 banks that
got emergency Fed funds during the 2007-2009 financial crisis
while their top executives served on the boards of regional Fed
"This report reveals the inherent conflicts of interest at
the Fed," Sanders said in a statement.
Dimon, a member of the board of the New York Federal Reserve
Bank, had taken on a leading role as spokesman for the banking
industry's objections to financial reforms aimed at preventing a
repeat of the 2007-2009 crisis. He is due to testify before
Congress on Wednesday about embarrassing trading losses at his
firm that have raised questions about oversight.
Sanders has proposed legislation barring bankers from having
a role on the board of the 12 regional Fed banks, saying it is
wrong for executives to govern an institution that regulates
The Federal Reserve - the U.S. central bank and lender of
last resort - is composed of a seven-member board of directors
in Washington and 12 regional Fed banks around the country, each
of which has its own board of directors.
The president appoints the members of the Fed board, subject
to Senate confirmation, and each board member votes at monetary
The regional Fed bank presidents, who have rotating rights
to vote at policy gatherings, are selected by their own boards
of directors. The boards are composed of bankers, business
people, and community representatives selected by regional banks
and by the Fed board.
Members of regional Fed bank boards are prohibited by Fed
policy from involvement in regulatory actions, and are limited
to providing information about the evolution of the regional
Defenders of the existing system say regional directors have
no influence over supervision and play an important role in
interpreting economic trends that helps in policymaking.
However, critics charge that because the board members help
select the regional institution's president, there is in fact a
A GAO report on possible conflicts of interest in the Fed
governance system concluded that there were none, but there was
the risk of an appearance of conflict.
The report said that while directors of regional banks were
consulted during the creation of emergency programs, only those
firms that satisfied eligibility requirements were allowed to
use them. GAO said directors were not involved in making
decisions about approving or setting terms for any loans.
The Fed board and regional Fed banks declined to comment on
While the names of institutions receiving emergency Fed
loans during the crisis is public, the GAO identified the
bankers who were serving on regional Fed boards, and how much
their firms received, a Sanders spokesman said.
GAO named bankers and business people with possible
conflicts sitting on the board of nine of the regional Feds,
Sanders said. Besides Dimon, the GAO identified former New York
Fed board members Jeffrey Immelt, chief executive of General
Electric, and Sanford Weill, former chief executive of