Sens. Bernie Sanders, I-Vt., Mark Begich, D-Alaska, and Barbara Boxer, D-Calif., have introduced legislation to prohibit banking industry executives from serving as directors of the 12 Federal Reserve regional banks. The new legislation follows the controversy surrounding the recent $2 billion trading loss at JPMorgan Chase, whose chief executive is a member of the board of directors of the Federal Reserve Bank of New York.
Under the legislation, no one who works for or invests in a firm eligible to receive direct financial assistance from the Federal Reserve would be allowed to sit on the Fed's board of directors or be employed by the Fed. The measure also would prohibit Federal Reserve employees or board members from owning stock or investing in companies that the Fed oversees, regulates and supervises without any exceptions or waivers.
‘It is a blatant conflict of interest for Jamie Dimon, the CEO and chairman of JPMorgan Chase, to serve on the New York Fed's board of directors,’ Sanders says. ‘If this is not a clear example of the fox guarding the henhouse, I don't know what is.’
‘Allowing bank presidents to play such an important role at the Fed – the institution that regulates their industry – is a conflict of interest, plain and simple, and it must come to an end. This legislation will help restore the confidence of the American people that the Fed is a truly independent entity,’ Boxer adds.