$4 trillion conflict of interest: Investment bankers on Fed boards

Who else but Independent Vermont Senator Bernie Sanders would have the courage to blow the whistle on the $4 trillion Fed scam involving near zero-interest Federal Reserve loans and other financial assistance that went to banks and businesses of at least 18 current and former Federal Reserve regional bank directors in the aftermath of the 2008 financial collapse, all documented in the Government Accountability Office records?

It was on the eve of Senate testimony by JPMorgan Chase CEO Jamie Dimon, on June 13, that Sanders released the detailed findings on Dimon and other Fed board members whose banks and businesses benefited from Fed actions. The GAO data also appeared at ReadersSupporedNews.org (RSN).

RSN reports, “A Sanders’ provision in the Dodd-Frank Wall Street Reform Act required the Government Accountability Office to investigate potential conflicts of interest. The Oct. 19, 2011 report by the non-partisan investigative arm of Congress laid out the findings, but did not name names. Sanders today released the names.

“This report reveals the inherent conflicts of interest that exist at the Federal Reserve. At a time when small businesses could not get affordable loans to create jobs, the Fed was providing trillions in secret loans to some of the largest banks and corporations in America that were well represented on the boards of the Federal Reserve Banks. These conflicts must end,” Sanders said.

“The GAO study found that allowing members of the banking industry to both elect and serve on the Federal Reserve’s board of directors creates ‘an appearance of a conflict of interest’ and poses ‘reputational risks’ to the Federal Reserve System.”

The study further revealed, “In Dimon’s case, JPMorgan received some $391 billion of the $4 trillion in emergency Fed funds at the same time his bank was used by the Fed as a clearinghouse for emergency lending programs. In March of 2008, the Fed provided JPMorgan with $29 billion in financing to acquire Bear Stearns. Dimon also got the Fed to provide JPMorgan Chase with an 18-month exemption from risk-based leverage and capital requirements. And he convinced the Fed to take risky mortgage-related assets off of Bear Stearns balance sheet before JP Morgan Chase acquired the troubled investment bank.”

But it wasn’t only Jamie Dimon

The report says, “The high-profile conflict involved Stephen Friedman, the former chairman of the New York Fed’s board of directors. Late in 2008, the New York Fed approved an application from Goldman Sachs to become a bank holding company, giving it access to cheap loans from the Federal Reserve. During that period, Friedman sat on the Goldman Sachs board. He also owned Goldman stock, something that was prohibited by Federal Reserve conflict of interest regulations. Although it was not publicly disclosed at the time, Friedman received a waiver from the Fed’s conflict of interest rules in late 2008. Unbeknownst to the Fed, Friedman continued to purchase shares in Goldman from November 2008 through January of 2009, according to the GAO.

“In another case, General Electric CEO Jeffrey Immelt was a New York Fed board member at the same time GE helped create a Commercial Paper Funding Facility during the financial crisis. The Fed later provided $16 billion in financing to GE under this emergency lending program.”

In fact, “Sanders on May 22 introduced legislation to prohibit banking industry and business executives from serving as directors of the 12 Federal Reserve regional banks.” It looks like no one was paying attention to the legislation.

“During the financial crisis, at least 18 former and current directors from Federal Reserve Banks worked in banks and corporations that collectively received over $4 trillion in low-interest loans from the Federal Reserve.” Here are more of the dual identity bankers . . .

“Sanford Weill, the former CEO of Citigroup, served on the Fed’s Board of Directors in New York in 2006. During the financial crisis, Citigroup received over ‘$2.5 trillion in total financial assistance from the Fed.’

“Richard Fuld, Jr., the former CEO of Lehman Brothers, served on the Fed’s Board of Directors in New York from 2006 to 2008. During the financial crisis, the Fed provided $183 billion in total financial assistance to Lehman before it collapsed.

“James M. Wells, the Chairman and CEO of SunTrust Banks, has served on the Board of Directors at the Federal Reserve Bank in Atlanta since 2008. During the financial crisis, SunTrust received $7.5 billion in total financial assistance from the Fed.

“Richard Carrion, the head of Popular Inc. in Puerto Rico, has served on the Board of Directors of the Federal Reserve Bank of New York since 2008. Popular received $1.2 billion in total financing from the Fed’s Term Auction Facility during the financial crisis.

“James Smith, the Chairman and CEO of Webster Bank, served on the Federal Reserve’s Board of Directors in Boston from 2008–2010. Webster Bank received $550 million in total financing from the Federal Reserve’s Term Auction Facility during the financial crisis.

“Ted Cecala, the former Chairman and CEO of Wilmington Trust, served on the Fed’s Board of Directors in Philadelphia from 2008–2010. Wilmington Trust received $3.2 billion in total financial assistance from the Federal Reserve during the financial crisis.

“Robert Jones, the President and CEO of Old National Bancorp, has served on the Fed’s Board of Directors in St. Louis since 2008. Old National Bancorp received a total of $550 million in low-interest loans from the Federal Reserve’s Term Auction Facility during the financial crisis.

“James Rohr, the Chairman and CEO of PNC Financial Services Group, served on the Fed’s Board of Directors in Cleveland from 2008–2010. PNC received $6.5 billion in low-interest loans from the Federal Reserve during the financial crisis.

“George Fisk, the CEO of LegacyTexas Group, was a director at the Dallas Federal Reserve in 2009. During the financial crisis, his firm received a $5 million low-interest loan from the Federal Reserve’s Term Auction Facility.

“Dennis Kuester, the former CEO of Marshall & Ilsley, served as a board director on the Chicago Federal Reserve from 2007–2008. During the financial crisis, his bank received over $21 billion in low-interest loans from the Fed.

“George Jones, Jr., the CEO of Texas Capital Bank, has served as a board director at the Dallas Federal Reserve since 2009. During the financial crisis, his bank received $2.3 billion in total financing from the Fed’s Term Auction Facility.

“Douglas Morrison was the Chief Financial Officer at CitiBank in Sioux Falls, South Dakota, while he served as a board director at the Minneapolis Federal Reserve Bank in 2006. During the financial crisis, CitiBank in Sioux Falls, South Dakota received over $21 billion in total financing from the Federal Reserve.

“L. Phillip Humann, the former CEO of SunTrust Banks, served on the Board of Directors at the Federal Reserve Bank in Atlanta from 2006–2008. During the financial crisis, SunTrust received $7.5 billion in total financial assistance from the Fed.

“Henry Meyer, III, the former CEO of KeyCorp, served on the Board of Directors at the Federal Reserve Bank in Cleveland from 2006–2007. During the financial crisis, KeyBank (owned by KeyCorp) received over $40 billion in total financing from the Federal Reserve.

“Ronald Logue, the former CEO of State Street Corporation, served as a board member of the Boston Federal Reserve Bank from 2006–2007. During the financial crisis, State Street Corporation received a total of $42 billion in financing from the Federal Reserve.”

For more banks, names, and company information that the GAO information provides, click here to see the Senate PDF. The information is an indictment of the Fed’s practice, loaning interest-free funds to investment banks and other corporations whose officials sat on Fed Bank Boards as well.

Perhaps four questions need to be asked. Why wasn’t the Glass-Steagall Act reinstated? Two, why hasn’t Clinton been asked to explain why he repealed it? Three, when do we overhaul or eliminate the Fed? Four, when do we say thanks to Bernie?

Jerry Mazza is a freelance writer, life-long resident of New York City. An EBook version of his book of poems “State Of Shock,” on 9/11 and its after effects is now available at Amazon.com and Barnesandnoble.com. He has also written hundreds of articles on politics and government as Associate Editor of Intrepid Report (formerly Online Journal). Reach him at gvmaz@verizon.net.

PrintFriendly

13 Responses to $4 trillion conflict of interest: Investment bankers on Fed boards

  1. Pingback: $4 trillion conflict of interest: Investment bankers on Fed boards « InvestmentWatch

  2. Pingback: The Economy | The Aussie Digger : Home of all Australian Veterans ex Service and Serving members

  3. Pingback: $4 trillion conflict of interest: Investment bankers on Fed boards | _

  4. Pingback: $4 trillion conflict of interest: Investment bankers on Fed boards | OzHouse Alt News

  5. Angry Voter

    Of course the Fed is full of bankers.

    The Fed has always been part of the anational banking cartel.

    The Fed is to banks what the MPAA is to movie publishers and the RIAA is to music publishers – an attempt at monopoly by all means fair and foul.

    Anyone that does business with a bank is just begging to be ripped off. What makes me so angry is that I have specifically avoided them but the occupational government steals from me by threat of force (if you don’t pay taxes, men with guns will come take you away) and gives to the bank cartel anyway.

  6. My thanks to the three Pinkbackers, who have picked up my article. It gives me hope to keep on sending the banksters to hell, wherever they are. And thanks to Bernie Sanders for courageously compiling this list of Fed/Corporate criminals. Perhaps we can rethink bagging the Fed and create our own sovereign currency, a currency directly from the U.S. Government, not a pack of banksters taking a piece of the action on every buck they print.
    Regards,
    Jerry Mazza

  7. to ANGRY VOTER:
    The FED is short for the Federal Reserve Bank, established in 1917 in secrecy by the Morgans, Rockefellers, Rothschilds, and others, via the creation of the Federal Reserve act, which created the bank and was written by Paul Warburg, representing the Rothschilds and his German bank. Woodrow Wilson was promised the presidentcy and given a $50,000 bribe to push through the FCA asap. He did so on a Christmas Eve, when Congress was on vacation, and we’ve been living the results for the past 80 years. The Federal Reserve Bank is a private bank, with bankster shareholders, who have received and are receiving a great deal of money for their initial investments. The time has come, as I mentioned above, to get rid of the Federal Reserve Bank, and create a sovereign currency, which the USG would control, as Lincoln did after the Civil War to pay its bills. The FDC was never a part of the USG, and has operated in an advisory capacity, only recently opened to any kind of scrutiny. The Fed bankers are ripping off the citizens of the USA as they expand and contract the money supply and the interest rates at their will, and provide easements for their fellow travellers, at home and abroad. The FED’s functions can be turned over to the Treasury Department and the U.S. Mint and its activities and personnel monitored by the President.
    Jerry Mazza.

  8. ARMED WITH THIS INFORMATION THE US CONGRESS WILL PASS A BILL TO CAP ALL MONIES THAT WILL BE GIVEN TO THE SAME GROUP OF BANKSTERS TO..$ 6 TRILLION…AS INFATION NEEDS TO BE ACCOUNTED FOR…… THE CONGRESS THE FED AND THE BANKSTERS ARE WORTHLESS POS…AND ALL NEED TO BE JAILED…AS ICELAND HAS DONE…THANKS BERNIE…FOR THE REPORT….JUST MORE PAPER TO SEND TO THE ROUND FILE

  9. Pingback: $4 trillion conflict of interest: Investment bankers on Fed boards | Hidden financial system | Scoop.it

  10. Conrad Golich

    Jerry, why don’t you publish the actual owners of the Federal Reserve–the European JEWISH banks! Our Federal money should not be privately controlled. And yes it should be a U.S. Federal government organization. Us/US.

  11. Everyone of them should be thrown in jail for LIFE and all thier assets frozen or given back to the people.

  12. You’ve made some really good points there. I looked on the net for more info about the issue and found most people will go along with your views on this web site.