NY Fed chairman says Dimon should stay on bank's board

After JPMorgan announced it had lost billions of dollars on a complex bet on corporate debt, some liberal lawmakers have mounted a high-profile campaign to have Dimon removed from his spot at the New York Fed.

Even Treasury Secretary Timothy Geithner, who worked with Dimon as head of the New York Fed before joining the Obama administration, has expressed sympathy for Dimon's exit from the institution. In an interview with PBS Newshour, he said it is "true" that there is a "basic perception problem" in that the public perceives a conflict when bankers like Dimon have a seat at the Fed. While noting that banking members of the Fed play no role in supervising the banking industry, he said the arrangement is "something worth trying to change."

Sens. Bernie SandersBernard (Bernie) SandersOvernight Defense: Senate passes 0B defense bill | 3,000 US troops heading to Afghanistan | Two more Navy officials fired over ship collisions Senate passes 0B defense bill Dems fear lasting damage from Clinton-Sanders fight MORE (I-Vt.), Barbara BoxerBarbara BoxerTrump riles Dems with pick for powerful EPA job Pelosi's chief of staff stepping down Time is now to address infrastructure needs MORE (D-Calif.) and Mark BegichMark Peter BegichPerez creates advisory team for DNC transition The future of the Arctic 2016’s battle for the Senate: A shifting map MORE (D-Alaska) are pushing legislation that would prohibit bank employees or individuals invested in banks from advising the Fed's network of banks, arguing that it is a conflict of interest to give industry representatives a role at the regulator overseeing the industry. Elizabeth WarrenElizabeth Ann WarrenSenate Dems hold floor talk-a-thon against latest ObamaCare repeal bill Trump bets base will stick with him on immigration Dems call for action against Cassidy-Graham ObamaCare repeal MORE, the consumer advocate challenging Sen. Scott Brown (R-Mass.), made a similar call shortly after Dimon disclosed the bank's losses.

Last Wednesday, Sanders pressed Fed Chairman Ben Bernanke on Dimon's presence at the Fed when he appeared before a congressional panel.

"Many people, including myself, see this as a situation where the fox is guarding the henhouse," Sanders said. "We need real reform in the Fed to make sure it's representing the middle class, small business of this country rather than just Wall Street and the big-money interests."

Bernanke responded that when Congress wrote the law establishing the Federal Reserve system, it stipulated the role of bankers, which means it is up to Congress to change it.

"I think we've made it into something useful and valuable. We do get information from it," he said. "But if Congress wants to change it, you know, of course we will work with you to find alternatives."