Treasury Secretary Timothy F. Geithner said having bankers on the board of the New York Federal Reserve creates a “perception” problem.
Geithner was responding to a question about whether Jamie Dimon, the chief executive officer of JPMorgan Chase & Co., should be on the board of the New York Fed.
Board members play no role in supervision, rule-writing and response to a financial crisis, Geithner said, according to a transcript of comments he made in an interview with PBS television’s NewsHour being broadcast tonight.
“But I agree with you that the, that perception is a problem,” Geithner said, according to the transcript. “And it’s worth trying to figure out how to fix that.”
Elizabeth Warren, a Democrat running for U.S. Senate from Massachusetts, called for Dimon’s removal from the district bank board. Senator Bernard Sanders, a Vermont Independent, said he sees a conflict in Dimon’s two roles. Dimon last week reported a $2 billion trading loss at JPMorgan.
“I think it’s a problem that that -- the structure of the Fed, established 90 years ago, and it’s true for Federal Reserve banks across the country, creates that basic perception,” Geithner said, according to the transcript. “And I think that’s something worth trying to change.”
Dimon is one of three bankers sitting on the board of the New York Fed, as required by the Federal Reserve Act of 1913. The 2010 Dodd-Frank Act ended the practice of banker directors having a vote in electing regional presidents, a move the New York Fed’s William C. Dudley said in a September interview that he supported.
Fed governance came under scrutiny after taxpayer-funded bailouts during the 2008 financial crisis sparked a political backlash. The Dodd-Frank Act required a Government Accountability Office audit of the central bank, which was completed last year and found the Fed needs to strengthen policies governing conflicts of interest and improve transparency.