After calling for JPMorgan Chase & Co. CEO Jamie Dimon to step down from his position on the board of the New York Federal Reserve, Simon Johnson, former chief economist at the International Monetary Fund (IMF), launched a petition to have Dimon removed from the post. On Monday he delivered that petition, which in a month has garnered nearly 38,000 signatures, to senior staff at the Federal Reserve Bank of New York.
In a call with reporters, Johnson said that he was not optimistic over the possibility that Dimon would step down or be removed, nor was he optimistic over the state of affairs at the New York Fed.
No members of the board of governors, said Johnson, were available to meet with him “in any time frame” that was practical. Instead he met with Scott Alvarez, senior counsel, and Board Secretary Jennifer Johnson to deliver the petition. While it was a “very cordial and professional conversation” in the closed meeting, he said it presented “nothing that changed my lack of optimism.”
“Frankly,” Johnson said, “I think he should have stepped down in 2008 when JPMorgan acquired Bear Stearns” with financing assistance from the Fed. “I think, to any outsider with knowledge about best practices,” he continued, “this looks like a related-party transaction,” and typically such an appearance would result in a resignation from the board.
Now that Dimon and his firm “are under investigation for potential serious wrongdoing,” he added, Dimon’s continuance on the board at least offers the appearance of impropriety.
Johnson also said that if Dimon does not take the initiative to resign and is not removed, both he and Lee Bollinger, president of Columbia University and chairman of the New York Fed’s board of governors, should step down when their terms expire at the end of the year. Bollinger has come under criticism for defending Dimon and supporting his continuance on the board, when JPMorgan was an important donor to Columbia.
Johnson’s petition is not the only one calling for Dimon’s removal. The group The Other 98% has sponsored a petition calling for Dimon to resign that has gotten more than 20,000 signatures.
While Johnson said that he was not optimistic on either the possibility of Dimon’s departure or a change of the rules at the New York Fed that would lessen the influence, or the appearance of influence, over the governors, he added that change might depend on developing world events.
While JPMorgan Chase’s “exposure to core eurozone dissolution risk seems to be fairly small,” he said, if it turns out to have a greater than expected exposure to debt in the eurozone and the situation in Europe deteriorates further, the board—or Dimon—could be spurred to action.
“Dimon stepping down would be huge,” said Johnson, because nothing like that has been seen in the U.S.