Regulating Yourself

The presence of J.P. Morgan’s Dimon on the New York Fed board symbolizes the continuing fraud of a financial system in which police are magically unnecessary because the perps ensure their own honesty.

It was, for Americans, a very long time ago, but back in 2007, the U.S. financial system essentially collapsed and had to be pumped back up by a bailout of billionaires with tax dollars–a bailout so indefensibly large and so utterly under the table and string-free (the word for that is “corruption”) that to this day the government is hiding the true amount from the taxpayers who footed the bill. How that scandalous tango between bankers too big to prosecute and their buddies in Washington (Paulson, Geithner, Bernanke, Bush, and in the end Obama) occurred has of course now been related in detail. No matter. The key to the  whole confusing mess was quite simple – the Government decided that instead of earning its salary by regulating, it would just “trust.” And at the core of this trust was the New York Fed, essentially a regulatory agency held captive by Wall St.

Nothing has changed. Geithner moved from running the Fed to running the Treasury, and Jamie Dimon, Exhibit #1 for the prosecution, is on the Fed’s board. Dimon of course has been the leader of the pack demanding Washington write new regulatory laws designed, once again, to grant Wall St. a blank slate, and the courageous, patriotic Democrats have of course been caving in. The one person who has not been caving in was run out of Washington and is now running for the Senate from Massachusetts.

Her reaction to the latest revelations from Wall St.: Dimon should resign from the Fed because “he advises the Federal Reserve on the oversight of the financial industry.” [Bloomberg 5/13/12.] In other words, he advises Washington on oversight over himself. That is how our democracy works. Ain’t it cosy?

Now if Obama happened to want to distinguish himself from Mini-Dubya for the upcoming campaign, calling for a law prohibiting financial executives from serving on the N.Y. Fed either during or at any time after their corporate careers might be a good place to start. Then he could fire Geithner and replace him with someone independent of Wall St., say, Elizabeth Warren.