Senator Bernard Sanders said he sees a conflict with JPMorgan Chase & Co. (JPM:US) Chief Executive Officer Jamie Dimon serving on the board of directors at the Federal Reserve Bank of New York, JPMorgan’s regulator.
“It is an obvious conflict of interest,” Sanders, an Independent from Vermont, said today in an e-mail response to a question from Bloomberg News. “This is a clear example of the fox guarding the henhouse.”
Dimon serves as a Class A director at the New York Fed, which is reserved for bankers. The Dodd-Frank Act, which Sanders helped draft, eliminated the ability of Class A directors from the banking industry to appoint Fed district bank presidents. Fed banks also have Class B and C directors who are appointed to represent the public.
Dimon said in a conference call with analysts on May 10 that the bank suffered a $2 billion trading loss because of “sloppiness and bad judgment.” Fed officials have stepped up supervision of the largest banks, and are likely to take a close look at JPMorgan’s risk management procedures.
Sanders, who serves on the Joint Economic Committee, said he is working on legislation to end the participation of bank executives on Fed boards.
“No one who works for a firm receiving direct financial assistance from the Fed should be allowed to sit on the Fed’s board of directors or be employed by the Fed,” Sanders said.
JPMorgan spokesman Joseph Evangelisti didn’t respond to an e-mail and telephone call requesting comment.
To contact the reporters on this story: Craig Torres at email@example.com;
To contact the editor responsible for this story: Christopher Wellisz at firstname.lastname@example.org