Federal Reserve Board
The Federal Reserve Board (Board of Governors of the Federal Reserve System) is the governing body of the U.S. central banking system, established 1913; it appears in this vault primarily in connection with the BCCI scandal, in which the Federal Reserve approved Clark Clifford and Robert Altman's First American Bankshares acquisition without knowing of BCCI's secret beneficial ownership, and later investigated and fined BCCI's principals for the regulatory deception.
The Board of Governors of the Federal Reserve System (Federal Reserve Board) is the governing body of the United States central banking system, established by the Federal Reserve Act of 1913 and headquartered in Washington, D.C. The Board consists of seven members appointed by the President and confirmed by the Senate, serving 14-year terms. The Federal Reserve is responsible for U.S. monetary policy, banking supervision and regulation, and maintenance of the financial system's stability. As a bank regulator, the Federal Reserve holds primary supervisory authority over bank holding companies - a jurisdiction directly relevant to the BCCI scandal.1
BCCI and First American Bankshares
The Federal Reserve Board is prominently implicated in the BCCI scandal through its regulatory approval of the acquisition of First American Bankshares, the largest bank holding company in the Washington, D.C. area. In 1981-1982, a group of Middle Eastern investors fronted by Clark Clifford - the Washington super-lawyer and former Secretary of Defense - and his law partner Robert Altman sought Federal Reserve approval to purchase First American (then called Financial General Bankshares). The investors represented themselves as independent Arab investors with no connection to BCCI.
The Federal Reserve approved the acquisition. In reality, BCCI secretly controlled the purchase: the nominally independent Arab investors were BCCI nominees whose shares were financed by BCCI, and BCCI chairman Agha Hasan Abedi made the key decisions about First American's management. Clifford and Altman maintained publicly - and in sworn testimony to the Federal Reserve - that BCCI did not control First American, which congressional investigators and prosecutors subsequently concluded was false. Clifford and Altman were indicted in 1992 for fraud in connection with the deception of the Federal Reserve; Clifford was ultimately not tried due to ill health, while Altman was acquitted.2
The Federal Reserve's failure to detect BCCI's secret ownership of First American - despite BCCI's known reputation in the international banking community as an institution with irregular practices - was identified by the Kerry Committee investigation and the Bank of England's Bingham Report as reflecting significant regulatory failure. The Federal Reserve paid insufficiently close attention to the backgrounds of investors seeking approval, relied on representations without adequate independent investigation, and permitted BCCI principals to escape detection for nearly a decade.
Post-BCCI Response
Following the July 1991 closure of BCCI by international regulators, the Federal Reserve conducted its own investigation into BCCI's U.S. operations and imposed one of the largest fines in Federal Reserve history - $200 million - against BCCI and related entities in 1992. The settlement included the Federal Reserve's finding that BCCI and its principals had made false representations to the Board in connection with the First American acquisition, engaged in unsafe banking practices, and violated U.S. banking law.1
Iran-Contra Financial Flows
The Federal Reserve System's broader role in the Iran-Contra Affair was as the institutional infrastructure through which the financial flows of the "Enterprise" - Oliver North's off-books covert operations fund - moved through the banking system. Accounts at major U.S. banks, Swiss numbered accounts, and the network of front companies managed by Richard Secord and Albert Hakim all operated through correspondent banking relationships that passed through the Federal Reserve's payment system. The Federal Reserve itself was not involved in or aware of these operations, but its payment infrastructure was the medium through which the illegal financial transactions moved.2
Sources
Hidden connections 1
Entities named in this page's prose without an explicit wikilink — surfaced by scanning for known titles and aliases.
Local network
Federal Reserve Board's direct connections. Click any node to navigate, drag to pan, scroll (or pinch) to zoom. + 2‑hop expands the neighborhood one level further.