Columbia in a tangle over links to embattled JP Morgan boss Dimon

University facing accusations of conflict of interest over president Lee Bollinger's support of New York Fed ally Jamie Dimon

guardian.co.uk, Dominic Rushe in New York, Tuesday 12 June 2012

Lee Bollinger, president of Columbia University, has defended Jamie Dimon,
with whom he serves at the New York Fed. Photograph: Rick Bowmer/AP

Columbia University is facing accusations of a conflict of interest relating to the role of its president in cheerleading for the boss of JP Morgan Chase, one of Columbia's most generous financial backers.

Lee Bollinger, who has been president of Columbia since 2002, has been a vocal supporter of Jamie Dimon despite mounting criticism of the JP Morgan chief executive since the revelation of a $2bn trading loss at the bank's London office.

But critics say Bollinger has put Columbia, one of the most prestigious academic institutions in the United States, in an awkward position because of the financial support it receives from JP Morgan.

In the wake of the trading scandal, there have been calls for Dimon to step down from his role on the board of the New York Federal Reserve, one of the institutions with regulatory oversight of Wall Street banks.

On Monday, Bollinger said those making such calls were "foolish". His intervention was significant because Bollinger is chairman of the New York Fed's board of directors: he became the first board member to speak in defence of Dimon.

Dimon's role on the board of the regulator is likely to be questioned on Wednesday by a Senate banking committee that has summoned Dimon to talk about the losses. The NY Fed is charged with supervising JP Morgan Chase and other Wall Street banks, among other tasks.

Critics including Democratic senators, former IMF economist Simon Johnson, and Occupy Wall Street protesters have called for Dimon's removal, claiming a conflict of interest. Senator Bernie Sanders recently said having Dimon on the NY Fed board was like having "the fox guarding the hen house."

But in an interview with the Wall Street Journal Bollinger said: "I do not think he should step down." Bollinger said critics had a false understanding of how the Fed works. "Jamie, myself [and] the other members of the board do not get involved in oversight of the supervisory function of the New York Fed," Bollinger said.

Columbia declined requests for comment from the Guardian on the issue of the potential conflict of interest or the size of its ties with the bank. But the university's website shows that JP Morgan is a generous, long-term donor to the university. Columbia is in the midst of a campaign that aims to raise $5bn by 2013 to expand its campus, hire more staff and offer financial aid to poorer students. R Glenn Hubbard, dean of Columbia's graduate business school, has targeted JP Morgan and other banks as major donors.

The bank offers a matching gift program to employees, effectively doubling the size of any gift its employees give to the university. It gives money across the university, for example endowing over $25,000 to Columbia's school of social work, sponsoring a summer research program for science teachers. The bank's ties go back to at least 1888 when JP Morgan, the bank's founder, gave a $100,000 to help establish its Morningside Heights campus.

Akshat Tewary, one of the founders of Occupy the SEC, said there was "clearly a conflict of interest" in Bollinger's defence of Dimon. "Anyone who is opining on that issue should be independent, and shouldn't have a personal stake," he said.

Tewary said the constitution of the NY Fed means that bankers must sit on its board and while he would like to see that change, "being on the board itself isn't the issue."

He said Dimon had been a very vocal critic of financial regulation. "That is something that not all bankers do. And not all bankers have the same influence over policy as Jamie Dimon has. JP Morgan has spent millions of dollars lobbying trying to water down financial reforms."

As a NY Fed board member, Dimon is supposed to have limited influence on regulation, said Tewary. "Clearly, Dimon has taken a very active role in pushing for a certain type of regulation," he said. "If he was quietly sitting on the board, that would be a different matter."

Melanie Sloan, executive director of lobby group Citizens for Responsibility and Ethics in Washington, said: "You don't want to bite the hand that feeds you. Every university is protective of its donors. It's not exactly likely you would expect him to say anything critical of Jamie Dimon but it might have been smarter to stay quiet."

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