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NY Fed rules sideline Dimon and banks

Thursday 23 December 2010 - by Will Henley

Federal Reserve Bank of New York

Jamie Dimon, chief executive of JP Morgan Chase, has been barred from voting on senior Federal Reserve bank appointments under new corporate governance rules announced yesterday.

According to the New York Fed's revised procedures, all three "class A" directors are now ineligible to vote for presidents and first vice presidents of Reserve Banks.

Neither will the directors - who all represent banks - be able to approve the Fed's budget.

In a statement, the Fed's nine-member board of directors said that the change will ensure that bank directors will be unable to play "any role" in bank supervision.

The new rules were mandated in the Dodd-Frank Wall Street Reform and Consumer Protection Act and introduced on 16 December, it said.


"The board approved the revised and expanded rules, which are meant to further ensure that the board functions free from conflicts of interests, or the perception of such conflicts," it said.

Only "class B" and "C" directors, who represent borrowers from agriculture, commerce, industry, services, labour, and consumers, can now vote on senior appointments.

Other than Dimon, the other two class A directors affected are Banco Popular de Puerto Rico chairman Richard LCarrión and Adirondack Trust president Charles Wait.

Directors influence monetary policy by setting the discount rate and appointing bank presidents, who in turn sit on the influential Federal Open Market Committee.


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