By Orson Aguilar – Executive Director, The Greenlining Institute
Correction: An earlier version of this story misstated the total amount of combined Tarp funds received by Citigroup, Bank of America, JPMorgan Chase and Goldman Sachs. It is $105 billion.
It’s sad, but not much has changed since corporate greed and malfeasance nearly caused our economy to collapse. The Federal Reserve Bank of New York, assigned the job of protecting banking customers, recently named two CEOs, including Jeffrey Kindler of Pfizer, to fill their public interest positions. One must wonder why the Fed could not find qualified directors, with proven track records of public advocacy, to serve the public good. Pfizer, a so-called leader in serving the public good, was recently fined a record $2.3 billion by the Justice Department for fraudulent marketing of drugs. Among the many allegations, Pfizer paid kickbacks to health-care providers to induce them to prescribe drugs for uses not approved by the Food and Drug Administration.
Further, Pfizer, under Kindler‘s leadership, lags behind on issues related to corporate responsibility. For example, Pfizer, unlike other corporations, is not transparent in its management diversity, philanthropy to the underserved, lobbying expenses and other key indicators. Pfizer’s recent merger deal, financed with Tarp dollars, raises conflict-of-interest issues with the Fed. Earlier this year, Pfizer announced that it would combine with Wyeth Pharmaceuticals, a deal that would create the largest pharmaceutical company in the world. Of the proposed $68 billion merger, $22.5 billion is being funded through loans by five major banks. Four of those five — Citigroup, Bank of America, JPMorgan Chase and Goldman Sachs — received a combined $105 billion in Tarp funds. During a time when minority small businesses are struggling to gain access to credit, our taxpayer dollars are financing a major merger that will result in the loss of 19,000 jobs.
We also question why there hasn’t been more of an effort to bring people of color to the board. After all, communities of color have been hit hardest by the economic crisis. African-American and Latino subprime borrower losses resulting from foreclosure account for 46% of total losses to foreclosure, though these two groups make up only 27.9% of the U.S. population. With the addition of these two directors, there are no blacks or Asian members and only one Latino and one woman on this board. Earlier this year, the former chairman of the New York Fed, Stephen Friedman, was forced to resign because of a cozy relationship with Goldman Sachs, a company he once headed and a company that has profited heavily at taxpayers’ expense through recent government bailouts. Given past controversy, it appears that little has changed and that bad actors are being further rewarded. Kindler’s involvement, like Friedman‘s, could be a direct conflict of interest considering how his company is being financed.
Given these allegations, my organization calls on Chairman Ben Bernanke of the Federal Reserve to investigate this appointment, especially considering the controversial past of the New York Fed. Specifically, we request the disclosure of information on the other candidates in the running and if there were any true public candidates; and that the two candidates disclose their strategies for serving a public that is majority minority.
Last, the Fed should adopt strict new rules that more adequately define the public interest — including a rule that people appointed to public interest posts have a history of standing up for consumers. As it stands, these new appointees represent the interests of Wall Street, not Main Street — further stifling the public’s voice.