Thursday, June 14, 2012
Jeffrey Immelt and Barack Obama (AP Photo)
Following the 2008 financial crisis, the Federal Reserve provided more than $4 trillion in near zero-interest loans and other help to banks and businesses whose executives also served as directors for the national bank.
At least 18 current and former Fed regional bank directors had a direct stake in the trillion-dollar bailout given to teetering institutions, according to a report produced by the Government Accountability Office, but released by Senator Bernie Sanders (I-Vermont).
“This report reveals the inherent conflicts of interest that exist at the Federal Reserve,” Sanders said in a prepared statement. “At a time when small businesses could not get affordable loans to create jobs, the Fed was providing trillions in secret loans to some of the largest banks and corporations in America that were well represented on the boards of the Federal Reserve Banks.”
Sanders wants to end the potential conflicts of interest that come with having bank executives serving on the Fed’s boards. The senator introduced legislation in May that would prohibit banking industry and business executives from serving as directors of the Fed’s 12 regional banks.
To bolster his case, Sanders cited the example of Jamie Dimon, chief executive officer of JPMorgan Chase. A director of the Federal Reserve Bank of New York since 2007, Dimon was part of the Fed’s leadership when it approved $391 billion in emergency funds to JPMorgan Chase to help it through the Wall Street chaos.
In another example, Jeffrey Immelt, the CEO of General Electric, was a member of the New York Federal Reserve when it created the Commercial Paper Funding Facility, which then lent $16 billion to…General Electric.
-Noel Brinkerhoff
To Learn More:
Fed Board Member Conflicts Detailed by GAO: Banks and Businesses Took $4 Trillion in Bailouts (Senator Bernie Sanders)
Jamie Dimon Is Not Alone (Senator Bernie Sanders) (pdf)
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