I don’t understand the point Kansas City Fed President Esther George was trying to make last week with her press release, widely seen as an implicit call for Jamie Dimon to resign from the board of the New York Fed, explaining “the roles-and responsibilities-of Reserve Bank directors.” Talk about oblique! First, George quotes from the Fed’s Code of Conduct, which enjoins directors from engaging in conduct “affecting adversely the confidence of the public in the integrity of the Federal Reserve System.” Then she adds this: “There are high standards that apply to Reserve Bank directors, and when an individual no longer meets these standards, the director resigns voluntarily to allow someone who does meet the criteria to serve.”
Oh, come off it. To begin with, if you think Jamie should resign, just come out and say so. Who do you think you are, Yoda?
Second, what exactly did Jamie do that would hurt the public’s confidence in the Fed? Lose money on a trade? Esther, if that’s your standard for who’s fit to serve, no banker alive (or dead, for that matter) would qualify. Banking is all about balancing risk and reward. Which is to say, not all transactions are moneymakers. Beyond that, when the CIO trades did come acropper, Jamie couldn’t have acted more honorably. He disclosed them promptly, took responsibility for the problem, and began instituting changes to assure that it won’t happen again. What more does she want?
I know there’s not a lot going on out in Kansas City these days, but maybe President George could find something to do with her spare time than write idiotic press releases.
What do you think? Let me know!