Sanders, a champion of government transparency, put a provision in the Dodd-Frank Wall Street Reform Act that called for the Government Accountability Office to probe potential conflict of interests between banks and regulators. The GAO released its study in October without naming names. The Independent from Vermont released those names on the eve of Dimon’s testimony.
The GAO found that $4T in near-zero interest Fed loans made since the 2008 financial collapse went to banks/companies of at least 18 current and former Fed Reserve regional directors.
JPMorgan Chase received nearly $400B of the $4T bailout package and was used as the clearinghouse for emergency lending programs.
The Fed used JPMorgan as clearinghouse for the emergency lending program. It also gave JPMC $29B in financing to acquire Bear Stearns and agreed to take risky mortgage-related assets of Bear’s balance sheet prior to the hand over to JPMC.
The GAO found other juicy conflicts among Fed directors and including $814B bailed-out Goldman Sachs (board member Stephen Friedman), $183B Lehman Brothers (ex-CEO Dick Fuld), $16B General Electric (CEO Jeff Immelt) and $7.5B SunTrust Banks (CEO James West).
The GAO believes allowing members of the banking industry to serve as Fed board members poses “reputational risks” to the Federal Reserve system.
Sanders wants to fix that. He introduced a bill in May that would ban banking and business executives from serving on the 12 regional Fed boards.
Dimon warned today that Dodd-Frank created a mess of uncoordinated regulations, and got nods from Republicans who want to kill the Wall Street reform law. Smooth-as-silk Jamie will woo House Republicans next week.
A good bet: Republicans -- aided by spineless Democrats and a weak president -- will water down Dodd-Frank well before Sanders gets his bill passed.
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