Federal Reserve Chairman Ben S. Bernanke said the U.S. central bank is willing to work with Congress on a bill that would remove bank executives from the boards of regional Fed banks.
“If Congress wants to change it, of course we will” work with lawmakers, Bernanke said today in response to a question from Senator Bernie Sanders, an Independent from Vermont, during an appearance at the Joint Economic Committee. “Congress set this up,” and “we’ve made it into something useful and valuable.”
JPMorgan Chase & Co.’s $2 billion trading loss has revived concern that its principal regulator, the Federal Reserve Bank of New York, is too cozy with Wall Street as JPMorgan Chief Executive Officer Jamie Dimon serves on the New York Fed’s board. Bankers play no role in supervision.
Sanders, along with Democratic Senators Barbara Boxer of California and Mark Begich of Alaska, have introduced legislation that would remove banking industry executives from the 12 regional Fed banks’ boards of directors. Congress created the Fed nearly a century ago with a mix of public and private features, including putting bankers on the boards.
Bernanke said the Fed’s activities have been examined carefully in the aftermath of the credit crisis, including by the Government Accountability Office.
“There were no actual conflicts of interest” found, he said. The Fed has “a firewall so that the bankers do not have any information or ability to influence supervisory decisions.”