February 6, 2013 / 9:05 PM / in 5 years

Puerto Rico banker floated to replace Dimon on NY Fed board

NEW YORK, Feb 6 (Reuters) - Wall Street bankers have recommended that JPMorgan CEO Jamie Dimon’s seat on the board of the Federal Reserve Bank of New York should be filled by the head of a Puerto Rican bank.

In a Jan. 18 letter, a committee of New York-area bankers recommended that Banco Popular de Puerto Rico CEO Richard Carrion - who is already a director at the New York Fed - shift into the board seat that Dimon vacated at the end of last year.

If approved, the move could distance the U.S. central bank from JPMorgan Chase & Co’s “London Whale” fiasco - a $6-billion trading loss that alarmed regulators last year and sparked criticism that Dimon was a director at the Fed branch that directly supervised his bank.

If approved in a vote ending March 15, Carrion would effectively fill the board seat reserved for a representative of the largest banks in the New York Fed’s district.

Historically, that meant an official from a well-known Wall Street bank like JPMorgan. But because Puerto Rico is part of the New York Fed’s district, and because Banco Popular has grown enough in the last few years to be classified as a so-called Group 1 bank, Carrion is now qualified for the role.

If Carrion is approved, his Group 2 seat would then have to be filled.

Meanwhile, the boardrooms of regional Fed banks remain under the microscope on Capitol Hill.

Last month, outspoken Senator Bernie Sanders used Dimon as an example of conflict of interest when he promised to reintroduce legislation to ban bankers from directorships.

By law, three of the nine directors of Fed banks must be bankers, and they cannot participate in regulatory decisions. Those three, as well as three other directors, are chosen by bankers in the region, while the remaining three are appointed by the Fed Board in Washington.

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