Columbia’s Bollinger Criticized For Backing Dimon At Fed

The following article is brought to you by Michael McDonald at Bloomberg.Com.

Lee Bollinger, president of Columbia University and chairman of the New York Federal Reserve’s board of governors, is facing criticism over his support of JPMorgan Chase & Co. (JPM) Chief Executive Officer Jamie Dimon.
A group of 53 Columbia professors, students and alumni released a letter yesterday denouncing Bollinger’s defense this week of Dimon, a fellow member of the New York Fed board who is scheduled to testify to Congress today about JPMorgan’s recent $2 billion trading loss. Bollinger dismissed calls for Dimon to step down from the Fed board after the losses were revealed.

Bollinger abdicated his responsibility to maintain the “integrity, dignity and reputation of the Federal Reserve System,” by supporting Dimon’s tenure, according to the letter, signed by a group including Eric Schoenberg, an economics professor atColumbia Business School. Not only is the trading loss being investigated, Dimon has “long campaigned aggressively against important regulatory reforms designed to protect excessive risk taking,” they said.

“As an educator you have a special responsibility to demonstrate moral and intellectual credibility, something you have failed to do in this situation,” the group said. They urged Bollinger to reverse his support and call for Dimon’s immediate resignation.

David Stone, a spokesman for Columbia, didn’t immediately return calls and e-mails seeking comment.

Isolated Event

According to a copy of his prepared remarks, Dimon will tell Congress today that his traders didn’t understand the risk they were taking with bets on credit derivatives and hurt the bank. He also will say it was an isolated event.

Lawmakers plan to question Dimon at hearings this week and next about the bank’s losses after he initially called April news reports about the trades “a complete tempest in a teapot.” Shares of the bank, the biggest in the U.S. by assets, have dropped 17 percent since Dimon disclosed the mounting losses May 10, lopping about $26.5 billion from the firm’s market value.

Bollinger, who joined the board of the New York Fed after Columbia hired him in 2002, told the Wall Street Journal this week that people calling for Dimon to step down from the board were “foolish” and possessed a “false understanding” of how the Fed works.

“Gamblers should not have power over the banking system,” Marcellus Andrews, a professor of economics at Columbia, said in a statement attached to the letter. “Dimon is a gambler of the worst sort — one whose arrogance is such that he mistakes a run of good luck for skill and surrounds himself with boot lickers – - in banking and in politics.”

(CHASEHOMEFINANCESUX RESPONSE: The Only Foolish And Confused One Here Is Obviously You Mr. Bollinger . . . Because The Common Man Knows – YOU DON’T LET THE FOX GUARD THE HEN HOUSE! It’s Not As COMPLEX As You Want To Portray, Lee.)

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