With JPMorgan Chase's
While the man's reputation on Wall Street as a fixer of problems certainly precedes him, there is also the issue of his presence on the Federal Reserve Bank of New York, leading to questions regarding whether it is appropriate for the managers of big banks to hold seats on the board of an entity that is charged with supervising them.
It's a viable concern, and many big names such as Elizabeth Warren, who chaired the Congressional Oversight Panel for the Troubled Asset Relief Program, and former IMF counselor and current MIT professor Simon Johnson are calling for Dimon's resignation from the FRBNY. Even Treasury Secretary Timothy Geithner, himself a former New York Fed president, admits that there is at least the perception that Dimon's presence there is problematic.
While having Dimon exit his board seat might be a good start, the act would be mostly symbolic, as JPMorgan has already received so many goodies from the federal government that it's hard to believe he still wouldn't have the Fed's ear. Of course, much of Dimon's excellent reputation has been built on taxpayers' backs. It's a lot easier to steer a damaged ship when the choppy waters are being calmed by more than $390 billion in financial aid, as a recent document published by Sen. Bernie Sanders (I-Vt.) shows. The Fed also cleaned up Bear Stearns' portfolio before giving JPMorgan the funding necessary to acquire that outfit.
Many other banks also reap the benefits of Fed membership
As Sanders' document illustrates, JPMorgan has lots of company when it comes to receiving handouts for institutions with Fed representation. Here are just a handful of other financial entities that received pots of money during the financial crisis.
Other banks were lining up, too. State Street Bank pulled down $42 billion, possibly because of its CEO's presence on the Boston Fed in 2006 and 2007. KeyBank, a subsidiary of KeyCorp
Even General Electric
When taken in context, whether or not Dimon leaves his seat at the FRBNY is almost beside the point. The much larger picture shows that changes would have to be made within the Federal Reserve system itself if questions regarding undue influence and special treatment are ever to be taken out of the country's financial regulatory program.
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Fool contributor Amanda Alix owns no shares in the companies mentioned above. The Motley Fool owns shares of JPMorgan Chase, KeyCorp, and Citigroup. Motley Fool newsletter services have recommended buying shares of Goldman Sachs Group. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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