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than $4 trillion in near zero-interest Federal Reserve loans and other
financial assistance went to the banks and businesses of at least 18
current and former Federal Reserve regional bank directors in the
aftermath of the 2008 financial collapse, according to Government
Accountability Office records made public for the first time today by
Sen. Bernie Sanders.
On the eve of Senate testimony by JPMorgan Chase CEO
Jamie Dimon, Sanders (I-Vt.) released the detailed findings on Dimon
and other Fed board members whose banks and businesses benefited from
Fed actions.
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.
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.
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