NEW YORK -- A director of the Federal Reserve Bank of New York, who is supposed to represent the public, has provoked criticism that she has a conflict of interest as she defends Wall Street against the state's top law enforcer.
Kathryn Wylde, deputy chair of the New York Fed's board, challenged state Attorney General Eric Schneiderman's opposition to a proposed $8.5 billion settlement between Bank of America and a group of investors -- leaping to the defense of the financial industry -- according to remarks quoted Monday in The New York Times.
Wylde's day job is president and chief executive of the Partnership for New York City, a nonprofit that is funded by dues from its partner companies, which include the very banks involved in the talks to settle claims over hundreds of billions of dollars in soured home loans. Her apparent sympathy toward big banks compromises Wylde's ability to represent the public as a director of a bank regulator, said research analyst Christopher Whalen, who, along with analyst Barry Ritholtz, called for Wylde to resign.
"I'm just appalled," said Whalen, who is managing director of Institutional Risk Analytics. "She is a public director of a Federal Reserve Bank, and she's not supposed to behave this way. She is not an advocate for the industry."
"If she wants to be an advocate for the big banks," he continued, "then she ought to step down."
Wylde, whose duty at the Fed is explicitly "to represent the public," said in an email that she is not a bank regulator, that she does not have a conflict of interest and that her role as a New York Fed director is "to provide input to the Fed on regional economic conditions." Despite the fact that the New York Fed itself regulates banks, its board does not, Wylde explained.
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