US banks 'to capture' Federal Reserve?

23 May 2011

The largest banks in the US could "capture" the Federal Reserve, as the power of the lenders is becoming too great, new research has suggested.

Analysis carried out by Professor Renee Adams of the Financial Markets Group at the London School of Economics showed big banks stand to gain the most from having executives on Federal boards, the Independent reports.

The investigation also found that fewer lenders are involved in this process, with Professor Adams also discovering that there were limited numbers of contested elections for reserve bank directorships, while the amount of institutions nominating and electing directors is also falling.

"Potentially a way to go is to say, if you accept a position as a Fed director, you shouldn't also be working for a bank," Professor Adams noted.

Bloomberg recently reported that a number of banks in the US have offered billions of dollars in an attempt to settle a probe of their foreclosure practices by both state and federal officials.

By Asim Shah

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