Dimon’s Role on N.Y. Fed Board Sparks Fierce Debate

By Donna Borak

It’s the perception problem regulators at the Federal Reserve Board would rather go away. The fallout of JPMorgan Chase & Co.’s $2 billion trading loss has reignited old worries of just how close Wall Street is to one of its top regulators, the Federal Reserve Bank of New York. Politicians and consumer activists have called for Jamie Dimon, JPMorgan’s chairman and chief executive, to resign from his position as a board director at the New York Fed. Yet most observers agree that the perceived conflict of interest is just that — a perception that is a far cry from reality. Neither Dimon nor other directors from financial institutions have any role in the Fed’s regulatory activities. Still, the situation begs the question of whether the central bank should do more to distance itself from the institutions it regulates, especially when it comes to bankers who sit on the boards of all 12 Federal Reserve banks. “Just because it’s a perceived conflict of interest doesn’t mean it’s a real one,” said Karen Shaw Petrou, managing partner at Federal Financial Analytics Inc. “It’s a perception, but the reality isn’t there. The question is: Does the Fed need to cleanse itself even of the perception that isn’t right?”