JPMorgan Chase & Co. (JPM:US) Chief Executive Officer Jamie Dimon adds insight to the Federal Reserve Bank of New York board, said Tom Wilson, the Allstate Corp. CEO who previously was a director at the Chicago district bank.
“Jamie Dimon is a talented executive who knows a tremendous amount about financial services,” Wilson said today in a phone interview after the annual meeting of Allstate, the largest publicly traded U.S. home and auto insurer. “If it met his objectives and the objectives of the New York Fed board, then they should continue the relationship.”
Elizabeth Warren, a Democrat running for U.S. Senate from Massachusetts, has called for Dimon’s removal from the New York Fed board after he disclosed a $2 billion trading loss by his bank on May 10. Treasury Secretary Timothy F. Geithner has said having bankers on the board of the New York Fed creates a “perception” problem.
There are 12 regional reserve banks that oversee financial institutions in their districts and whose presidents serve on the policy-setting Federal Open Market Committee. The New York Fed chief has a permanent role on the panel, and other district bank presidents vote on a rotating basis. Wilson said the Chicago Fed benefited from the perspective of bankers.
“It creates a better dialogue and decision-making process,” Wilson said. “I found that the input and insight of the bankers were helpful to our dialogue as a Fed board, in terms of what we voted on.”
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 that New York Fed President William C. Dudley said in a September interview that he supported.
Dimon announced his bank’s trading loss two months after New York-based JPMorgan, the biggest U.S. lender by assets, passed a Fed stress test that put its loans and securities through a scenario of economic turmoil.
Wilson stepped down from the Chicago Fed last year as a result of Northbrook, Illinois-based Allstate (ALL:US) owning a thrift holding company at the time. His departure was to avoid issues that might arise as the regulator assumed responsibility for such thrifts, according to the Chicago Fed’s website. Wilson was one the Chicago Fed’s three so-called Class C directors, selected by the board to represent the public.
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