Incest and conflict of interest between banks and Federal Reserve

My posts keep touting the need for self-correcting systems. Well, how can a system be self-correcting if the regulators and the regulated are one and the same, for all practical purposes?

Here is an article describing how the wife of the President and CEO of the New York Fed, William C. Dudley, is a former VP at JPMorgan Chase has multi-million dollar accounts there and is receiving aggregate distributions of approximately $190,000 a year from JPMorgan.

AlterNet – Revealed: JPMorgan Paid $190,000 Annually to Spouse of Bank’s Top Regulator

Note that Dudley’s previous position, beginning January 1st, 2007 was head of the Fed Markets Supply Group that manages the supply of banking reserves with the mandate of the Federal Open Market Committee. In other words, he is a regulator.

And we wonder why the system keeps failing?

Update:

Here is another article discussing how the Fed knew about the LIBOR rate fixing as early as the fall of 2007. There was a “swirl of activity” on the part of the Fed in early 2008 culminating in a June 1st, 2008 memo by then-New York Fed President Tim Geithner. Yet we are only hearing about it now, 4 years later.

New York Fed’s Libor Documents Reveal Cozy Relationship Between Regulators, Banks

Tim Geithner drawn into Libor scandal

Bank of England says Timothy Geithner discussed LIBOR issue with bank in 2008

And we wonder why the system keeps failing?

The LIBOR rate fixing has cost individuals, companies and state and local governments an uncalculated but huge sum of money. Certainly, the estimated $14 billion in regulatory and legal settlements it is expected to cost the banks is not the full measure of its cost to the public, nor will the public ever be compensated for its damages.

While there are many in the banks who should be put in prison, Geithner has been Obama’s Secretary of the Treasury and has withheld this information from the public for 4 years. This is an incredible failure of his duty to the citizens of the United States.

Had Secretary Geithner brought this matter to public attention when he became aware of it in late 2007, the costs to the public would have been significantly less. Secretary Geithner is guilty of fraud and dereliction of his duties as both New York Fed President and Secretary of the Treasury of the United States. He should be fired and blacklisted from any government or banking position at the very least. An investigation should be begun on his criminal liability as well.

It is time to fire Timothy Geithner.

You can sign a petition to that effect here:

Fire Timothy Geithner from his position as Secretary of the Treasury

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