“My View” from the June 12, 2012 edition of “Viewpoint with Eliot Spitzer.”
Eliot Spitzer:
Lee Bollinger, the president of Columbia University, former dean of the University of Michigan Law School and the current chairman of the New York Federal Reserve Bank board says it is “foolish” to say that Jamie Dimon’s having a seat on the New York Fed board creates an appearance of a conflict of interest.
Foolish, he says.
Well, as they say on “Saturday Night Live” in a special segment dedicated to statements that are really out of touch, what I have to say to Lee is — really?
It is not foolish to see an appearance of conflict of interest here. Indeed, in addition to the appearance of conflict, there is an actual conflict of interest.
Dimon, the CEO of Morgan Chase, should not be on the full board. Full stop.
Here’s why:
• The board of the New York Fed picked the current president of the New York Fed. The president of the New York Fed is perhaps the most important regulator of banks like Morgan Chase.
That is a conflict, pure and simple.
• Dimon sits on committees that oversee the performance of senior members of the New York Fed. That is a conflict, pure and simple.
• Dimon is lobbying to relax rules that the New York Fed will adopt, implement and impose on banks like his own. That is a conflict, pure and simple.
• JPMorgan Chase has received special loans from the Fed, such as when it acquired Bear Stearns. That is a conflict, pure and simple.
• Dimon’s bank is under regulatory examination by the New York Fed. That is a conflict, pure and simple.
We do not put the CEOs of the airlines on the National Transportation Safety Board for a reason. We do not put the CEOs of pharmaceutical companies on the board of the FDA for a reason. We should not put the CEOs of banks on the board of the New York Fed.
Bollinger says that the law requires that there be bank representatives on the board.
Two responses: first — the law should be changed. Second, the law doesn’t require that the bankers be the CEOs of major entities then the subject of regulatory examination by the Fed.
Other bankers — academics or retired — are available. They would not have the conflicts that Jamie Dimon brings with him.
The entity hurt most by this is the New York Fed — it is now subject to second-guessing when its board creates these actual and perceived conflicts.
For the sake of the Fed, Dimon should resign.
That’s “My View.”
