At the end of last week, Treasury Secretary Tim Geithner called for Mr. Dimon to step down from the board of the New York Fed.Actually, Mr. Geithner did no such thing. He was asked three questions on the Lehrer NewsHour, which are worth reading in their entirety;
JEFFREY BROWN: Elizabeth Warren, who helped set up the Consumer Protection Agency for the administration, now running for the Senate in Massachusetts - she said that Jamie Dimon, head of JPMorgan, should not be sitting on the board of the New York Fed, that that just - it isn't right, because they help regulate those banks.]TIMOTHY GEITHNER: That's not a new observation, not a new concern. It's been made by many people over the last several years.JEFFREY BROWN: Do you think it's right?TIMOTHY GEITHNER: I think it is true. And I think it's a problem that that - the structure of the Fed, established 90 years ago, and it's true for Federal Reserve banks across the country, creates that basic perception. And I think that's something worth trying to change. But the American people should understand that although the Fed was set up that way, those banks and the members of the board play no role in supervision. They have no role in the writing of the rules, and they play no role in decisions the Fed makes about how to respond to a financial crisis. Their role is a much more limited role, and the role is to help provide a perspective on what's happening in the economy as a whole. But I agree with you that the, that perception is a problem. And it's worth trying to figure out how to fix that.JEFFREY BROWN: Do you think Jamie Dimon should be off the board?TIMOTHY GEITHNER: Well, that's a question he'll have to make and the Fed will have to make. But again, on the basic point, which is it is very important, particularly given the damage caused by the crisis, that our system of oversight and safeguards and the enforcement authorities have not just the resources they need, but they are perceived to be above any political influence and have the independence and the ability to make sure these reforms are tough and effective so we protect the American people, again, from a crisis like this. And we're going to, we're going to do that.
So, invited three times to ask Mr. Dimon to resign from the board, Geithner declines to take the bait. Yet, Simon Johnson (checking his secret decoder ring?) tells us;
Mr. Geithner spoke in the usual Treasury Department diplomatic code – he suggested there is a “perception” problem that must be addressed. To officials, this is as clear a statement as is needed. As chairman of the Financial Stability Oversight Council, Mr. Geithner is ultimately responsible for the health of the financial system and its systemically important components. He is telling Mr. Dimon to go.Or is English not Simon Johnson's native tongue?
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