Washington, D.C., November 21, 2014 – Dennis Kelleher, President and CEO of Better Markets, made the following statement today in response to the testimony of the President of the Federal Reserve Bank of New York before a Senate Banking Subcommittee.
“The Federal Reserve Bank of New York is a secretive regulator that has repeatedly failed to do its job and is clearly captured by the biggest banks on Wall Street. That record of failure has inflicted significant damage on the American people: missing, if not facilitating, the 2008 financial crash; failing pre-crash to regulate Citigroup (which required the largest bailout of almost $500 billion); ignoring evidence that the biggest global banks were rigging LIBOR rates (not to mention apparently rigging all the other global benchmarks and forex markets); disregarding internal requests to investigate JP Morgan’s high risk, complex London Whale CDS trading until it blew up and lost $7 billion; firing an employee allegedly for wanting to supervise Goldman; and, enabling the revolving door to get out of hand, leading to the alleged leaking of Fed documents to Goldman, and so much more,” said Dennis Kelleher, President and CEO of Better Markets, an independent nonprofit organization that promotes the public interest in the financial markets.
“The Federal Reserve Board’s announcement yesterday that it is going to conduct a limited review of its supervisory and regulatory practices to determine if it is doing its job and, presumably, whether or not it is captured is wholly insufficient. Moreover, the announcement on the eve of the Senate hearing suggests that it may be more a ploy to relieve political pressure than a serious effort. Indeed, after today’s disappointing testimony by the President of the New York Fed, those concerns are heightened. In particular, the testimony today was often evasive, unresponsive and failed to indicate an awareness of the seriousness of the issues,” Mr. Kelleher said.
“Today’s testimony made clear that only a thorough investigation — without limits and with subpoena power — of its supervisory and regulatory practices by a Blue Ribbon panel of nationally respected independent professionals and representatives of the public will be credible and have any hope of restoring the trust and confidence of the American people. The Chair of the Fed’s Board of Governors, Janet Yellen, must appoint such a panel promptly and require it to release the results to the public in no more than one year,” Mr. Kelleher said.
“Effective front line regulators like the New York Fed are essential to preventing another financial crash, more taxpayer bailouts and a second Great Depression. Failure of the Federal Reserve Board to act now to establish an independent, credible investigation that gets the facts, informs the public, and fixes the New York Fed would be inexcusable,” Mr. Kelleher concluded.
Better Markets is an independent, nonprofit, nonpartisan organization that promotes the public interest in financial reform in the domestic and global capital and commodity markets. Better Markets advocates for transparency, oversight and accountability with the goal of a stronger, safer financial system that is less prone to crisis and failure thereby eliminating or minimizing the need for more taxpayer funded bailouts. To learn more, visit www.bettermarkets.com.