United States Treasury Secretary Tim Geithner ’83 spoke with PBS Newshour on May 17 about the structure of the Federal Reserve System, particularly the potentially problematic seating of JPMorgan chief executive officer Jamie Dimon on the board of the Federal Reserve Bank of New York. The interview came following JPMorgan Chase’s $2 billion trading loss. Massachusetts Senate candidate Elizabeth Warren said that Dimon should resign from his position.

As one of the twelve U.S. Federal Reserve Banks, the Federal Reserve Bank of New York plays a role in setting monetary policy and financial regulation and supervision. Concerns are raised about the strength of the relationship between Wall Street and the Fed.

However, the problem, according to Geithner, does not lie directly in a conflict of interests, but instead in a “basic perception” of the American public. The perception and general knowledge about the structure of the Fed and its roles and responsibilities is “something worth trying to change,” Geithner said in the interview.

“Although the Fed was set up that way, those banks and the members of the board play no role in supervision, they have no role in the writing of the rules and they play no role in decisions the Fed makes about how to respond to the financial crisis,” Geithner said.

The most influential monetary policy makers are those holding one of the twelve seats on the Federal Open Market Committee. Seven of the seats are filled by the presidentially appointed Board of Directors, one seat belongs to the Federal Reserve Bank of New York president and the remaining four seats are rotated among the other eleven Federal Reserve Bank presidents. As a board member of the Federal Reserve Bank of New York, Dimon would have virtually no influence on the meetings of the Federal Open Market Committee, which are held eight times a year.

Concerns about Dimon’s — and other major Wall Street names’ — relationship with the Fed are not completely illegitimate. With a foot in the door, it would be foolish to believe that members like Dimon have zero influence on the operations of the Federal Reserve Bank of New York, even if he is not directly involved in large policy making.

Geithner’s point, however, about informed the American public so that their perception and knowledge about the structure of the Fed is still important, because only then can Americans truly form an educated opinion about the nature of the relationship between Wall Street and the Fed.