General Electric Co. (GE) CEO Jeffrey Immelt resigned from the Federal Reserve Bank of New York’s board of directors, citing “increased demands” on his time.
Immelt, 55, stepped down effective March 9, the New York Fed said in a statement Thursday (April 28). He noted in his resignation letter to New York Fed President William C. Dudley that his other commitments include the President’s Council on Jobs and Competitiveness, which he has led since January. Immelt had served as a regional bank director since January 2006, Bloomberg reported.
“I was very surprised that he even accepted the job on Obama’s council because being CEO of a diversified conglomerate like GE is more than a full time job,” said Sung Won Sohn, an economics professor at California State University-Channel Islands and former chief economist at Wells Fargo & Co. “He is probably stretched too thin.”
Immelt’s decision is unrelated to plans by the Fed later this year to begin supervising GE Capital, the Fairfield, Conn.-based company’s finance unit, GE spokesman Gary Sheffer said.
“Jeff enjoyed his five years on the board of the New York Fed and learned a great deal,” GE said in a statement. “He decided to step down to allow the opportunity for others to serve and to free up time to focus on other responsibilities.”
‘Too Big to Fail’
The Fed is poised to gain responsibility for non-bank financial firms deemed “too big to fail,” including GE Capital. The Dodd-Frank Act, signed into law by President Barack Obama in July, gave the central bank expanded authority over systemically important financial firms.
Immelt was a Class B director at the New York Fed, representing “the public,” and selected by member banks, according to the New York Fed statement. Class A directors at the Reserve Bank represent the member banks.
“Clearly now the Fed is going to be regulating a financial services company like GE Capital and I don’t think he should be sitting on the New York Fed board” as a Class B director, said Sohn, who is also vice chairman of retailer Forever 21 Inc. “If GE Capital were to get into any kind of trouble, it would be the New York Fed that would have to deal with it so I don’t think it’s appropriate for him.”
The New York Fed in December revised rules for its board of directors to avert conflicts of interest. Under Dodd-Frank, the three Class A directors are prohibited from appointing the president and first vice presidents of regional banks.
The New York Fed also restricted banker board members from “playing any role in bank supervision matters,” or naming the “senior leadership” for the bank supervision group, leaving those matters to board members representing the public, according to a Dec. 22 statement.
The New York Fed has since renamed its bank oversight division the Financial Institution Supervision Group, in a nod to its expanded authority.