PrezBo stands by J.P. Morgan’s man
J.P. Morgan Chase announced last month that it lost $2 billion this past quarter. The losses apparently stemmed from “errors, sloppiness, and bad judgment,” according to J.P. Morgan CEO Jamie Dimon. Now some are calling for Dimon, who has a seat on the Federal Reserve Bank of New York’s board of directors, to step down from his post at the Fed to avoid a potential conflict of interest.
One person who doesn’t think Dimon should step down? Lee Bollinger, chairman of the New York Fed’s board of directors. Prezbo says Dimon should not resign, and anyone who says that he should resign has a “false understanding” of how the Fed works, and is being “foolish.” You can check out the full story at the link, or the Reader’s Digest version after the jump:
1. As noted above, J.P. Morgan reveals in May that it lost $2 billion in trading last quarter.
2. Critics immediately begin to call for Dimon to step down from his position at the Fed, citing a conflict of interest. Former IMF chief Simon Johnson starts a Change.org petition to have Dimon removed. It reads, in part:
The fox is guarding the henhouse. It is entirely unacceptable to have Mr. Dimon involved in the governance of the New York Fed, an organization that oversees his activities, decisions, and potential losses.
To date, the petition has garnered more than 36,000 signatures. Also calling for Dimon to step down: Massachusetts Senate candidate Elizabeth Warren, who says Dimon’s resignation would “send a signal to the American people that Wall Street bankers get it and to show that they understand the need for responsibility and accountability.”
3. Dimon does not resign from his position on the Fed.
4. Someone (the Wall Street Journal) asks PrezBo what he thinks. “I do not think he should step down,” Bollinger replies. He goes onto explain away the calls for his ouster as the uproar of people who have a “false understanding” of the way the Fed works, and that these critics are stupid it is “foolish” to complain about having a banker on the board, because the law requires bankers to serve on the board.
Bollinger also noted that board members are not involved in “oversight of the supervisory function of the New York Fed,” but rather merely advise regional bank presidents on the economy and help in selecting bank presidents.
In any case, Dimon’s second term on the Fed board ends in December. By custom, board members leave after two terms, so he’ll probably be leaving the board then. Bollinger’s second term ends in December, as well.
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