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    Just Who Is the New York Federal Reserve Serving? The Public or Wall Street?

    By Eric Jackson | Forbes – Wed, Aug 24, 2011

    Earlier today, I wrote in TheStreet.com about my disgust with the governance of the New York Federal Reserve - specifically their board of directors.

    They currently have only 7 of 9 board seats filled. What's more, the 2 open seats have been open for over 3 years.

    The question is why?

    To review, there are 9 board seats of the NY Fed.  Three of those seats are selected by banks.  And currently, those 3 are Jamie Dimon of JP Morgan Chase (JPM), Richard Carrion of Banco Populaire, and  Charles Wait of Adirondack Trust.  

    There are 3 seats selected by the Board of Governors of the NY Fed to represent the public. These 3 include Kathryn Wylde (who is the President of the Partnership for New York City and got herself in hot water by criticizing the NY AG last week for not supporting a terrible deal that would let big banks get off the hook of future investigations into shoddy mortgage lending practices), Lee Bollinger who is the President of Columbia University and Emily Rafferty who is the President of the Metropolitan Museum of Art.

    Finally, there are 3 seats selected by the banks to represent the public.  Of these 3 seats, only 1 of these is filled.  By Jim Tisch of Loews Corporation (who I respect). 

    It's time for the NY Fed to be held accountable for why these seats haven't been filled in 3 years.

    Is it too hard to find someone in the whole country to fill the role?

    The head of the Met is on there -- so it doesn't appear that a director even needs to have any financial background or training to serve in this important governance role.

    Is it willful on the part of the NY Fed that the two spots haven't been filled? After all, the way it's currently constructed, there are (at least) 4 pro-banker directors on the board vs. 3 (counting Wylde among the 4). Maybe Wall Street banks have asked the NY Fed (their regulator) not to fill these extra seats because it suits their interests just fine.

    Isn't it time that the NY Fed actually monitor Wall Street, instead of being an extension of Wall Street?

    Or is the counter-argument to that position that the economy is too weak and therefore we need to continue to allow Wall Street to govern itself?

    Wait, I thought that it was the unprecedented lack of oversight in the decade leading up the 2008 financial crisis that led to a complete breakdown in the global financial system.

    Just who is in charge of the NY Fed? It's time for some answers.

    If the NY Fed won't answer why these two board seats continue to go vacant, I call on NY AG Eric Schneiderman to get some answers himself.

     

    9 comments

    • Larry Crosby
      Larry Crosby  •  9 mths ago
      do you really expect a room full of rich people to serve the public?
    • JPT
      JPT  •  9 mths ago
      Kill the Fed.

      Do it now.
    • Dink Singer
      Dink Singer  •  9 mths ago
      Mr. Jackson has the facts totally wrong. The two seats have not been open for over three years and the elections to fill them will be completed this month.

      One of the two seats has been vacant since March 9, 2011 when Jeffery R. Immelt, Chairman and CEO of GE, resigned from the Class B seat that is elected by the 46 small member banks (those with capital of less than $30 million). The election to replace him is underway and will be completed on August 31. There is only one candidate for election so it is a foregone conclusion that the new Class B director will be Macy's Chairman, President and CEO Terry J. Lundgren.

      The other seat has been vacant since December 31, 2010, the effective date of the resignation of James B. Kindler, who had been Chairman and CEO of Pfizer, from the Class B seat elected by the 12 big member banks (those with capital of more than $1 billion). The election to replace him will also be completed on August 31 and the only candidate is Glenn H. Hutchens, founder and co-chief executive of Silver Lake, a private venture capital firm. and Chairman of Sungard Corp.
      • Dink Singer
        Dink Singer 9 mths ago
        Oops, I got the name of the director who resigned on December 31, 2010, wrong. It is Jeffery B. Kindler, not James.
    • vick
      vick  •  9 mths ago
      Helping wall street ultimatley helps the people. America is still capitalistic. For those that want communism go to china, where they have finally realized capitalism is far better than poverty and communism, when it comes to economics.
      • JPT
        JPT 9 mths ago
        I'll give you a thumbs up only because you are technically right.

        In practice though, the Fed sucks at helping people. Wall Street can make a fortune and the public never sees it. The Fed doesn't help.
      • vick
        vick 9 mths ago
        We americans are like spoild children we don't know jack about economics or capitalism. Unfortunatly the fed doesn't know much either, but if wall street goes down the tubes so does freedom, democracy and prosperity and hello poverty for all.
    • vick
      vick  •  9 mths ago
      vvv
    • Laura
      Laura  •  9 mths ago
      I think this article is very relevant and I believe the author is precisely trying to point out that it's not about the public, it's about the banks and therefore "something is rotten in the state of Denmark"...
    • Dr RBS
      Dr RBS  •  9 mths ago
      Author is totally uneducated about the FED. it's not about the public. it's about the banks. the public membership is window dressing only. read some history before you write an article. seriously. you need some history lessons. typical of current writer's on the web. unknowledgable and untrained and uneducated.
      • Fred
        Fred 9 mths ago
        it is a private business, that have recived protection and favoritisom from the government in the areas of competion and legality of their operating structures (those little regulations that no one reads unless they are an attorney)
    • Alan
      Alan  •  9 mths ago
      the fed serves wall street & the big banks not us. they print up money to help wall street & make our pay checks buy less. does anyone really think that any thing connected to washington, the politicians & our government serves the will of the people any more? they just like to make us think they do come election time. it must work, they keep getting re-elected.
    • Old Guy
      Old Guy  •  9 mths ago
      Three seats selected by the banks, three by the Board and three more by the banks. I do not understand and do not have the time to look it up. Thanks for the concise update on the NY Fed.
     Post a comment
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