Bloomberg the Company & Products

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

Kocherlakota Sees No Conflict With Bankers on Fed Boards

Aug. 15 (Bloomberg) -- Federal Reserve Bank of Minneapolis President Narayana Kocherlakota said he sees no conflict of interest arising from the fact that bankers serve on the boards of the regional Fed banks.

“Isn’t it wrong, these critics say, to give bankers power over those who are supposed to supervise them?” Kocherlakota said in the text of prepared remarks today in Minot, North Dakota. “It would be wrong if that were the case, but members of the board of directors -- bankers or not -- have no say in how Federal Reserve banks conduct their supervisory operations.”

U.S. lawmakers including Senator Bernie Sanders of Vermont want to ban bank employees from regional Fed boards, warning about conflict of interest. Such representation came under scrutiny after JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon, a board member at the New York Fed, revealed in May what is now estimated to be at least $5.8 billion in trading losses.

Sanders, an independent, introduced legislation in May that would bar employees of bank holding companies or other firms regulated by the Fed from serving on the boards of the 12 regional Fed banks.

Bankers provide regional Fed bank presidents with information about credit conditions and the economy, which is “precisely the kind of information that policy makers need to do their job,” Kocherlakota said.

The Minneapolis Fed chief didn’t comment on the economy or the outlook for monetary policy in his prepared remarks. He is not a voting member of the policy-setting Federal Open Market Committee this year.

To contact the reporter on this story: Aki Ito in San Francisco at aito16@bloomberg.net.

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.