On Monday I met with senior staff members of the Federal Reserve System to deliver and discuss a petition I created, signed by 38,000 people, requesting that Mr. Dimon resign or be removed from the New York Fed board. They were gracious in the time they afforded me.That would be one way to describe, not having them laugh in your face, we suppose. What Prof. Johnson is objecting to is that in March 2008, after Bear Stearns' CEO had called Jamie Dimon to admit his firm was about to go under, and being denied any assistance, Mr. Dimon received a call from Tim Geithner of the NY Fed, virtually begging for his assistance in resolving the impending bankruptcy of Bear.
Dimon, mindful of his fiduciary duty to his own shareholders, agreed to do so, but only on terms that wouldn't endanger his own bank. But, in scholarly circles, no good deed shall go unpunished (if Prof. Johnson is typical);
How was it appropriate for Mr. Dimon to remain on the board of the New York Fed while this negotiation was going on?
....Mr. Dimon, of course, does not run the New York Fed ....
As for the terms of Fed support, this was obviously more generous that what would have been provided by the market – in part because the Fed had become convinced that such action was needed to stabilize the broader market.Fed support? How about the support Mr. Dimon's firm provided to Geithner. Support he'd already directly denied to Bear Stearns. We pity the next banker to whom the NY Fed turns in a future crisis.
And, oh, even Johnson admits that Dimon's assistance worked to the Fed's advantage;
To be clear, this loan has been repaid in full – in fact, just two weeks ago, the New York Fed was able to announce (on its Maiden Lane page): “The successful repayment of the loans marks the retirement of the last remaining debts owed to the New York Fed from the crisis-era interventions with Bear Stearns and A.I.G.” (This included repayment of loans made to Maiden Lane III, which was one of the financing vehicles created when A.I.G. was rescued.)
The full results of the Maiden Lane intervention are not yet known – and there may be some upside for the taxpayer: “Proceeds from future sales of ML L.L.C. assets will be used to repay the subordinated loan extended by JPMorgan Chase & Company, after which the New York Fed will receive all residual profits.”However, Johnson apparently felt he needed an encore for this comedic performance;
I have a further question about the role of Lee C. Bollinger, the president of Columbia University, who is a Class C director and current chairman of the board of the Federal Reserve Bank of New York. (I discussed his position more broadly in my June 14 review of Federal Reserve governance.)
According to the Federal Reserve Act (Section 4.20): the chairman of the board of directors of a Federal Reserve Act “shall be a person of tested banking experience.”
Mr. Bollinger is a distinguished First Amendment lawyer and an experienced university administrator. However, he does not have banking experience of any kind. He has not written or spoken publicly about banking or finance matters.Simonized if you do. Simonized if you don't.