The Government Accountability Office made formal recommendations to the Federal Reserve board of directors to reform its reputation for holding severe conflicts of interest. The GAO found that although the Fed manages potential conflicts of interest, stronger and more transparent rules should be installed to prevent the appearance of some directors taking advantage of their Fed status. For instance, 18 former and current members of the Fed board were affiliated with banks and other companies that received emergency loans from the central bank during the financial crisis. JPMorgan Chase (JPM) CEO Jamie Dimon served on the Federal Reserve Bank of New York board at the same time Chase received these loans from the Fed. In March 2008, the Fed also provided Chase $30 billion in financing to purchase Bear Stearns. Dimon was able to persuade the Fed to grant his bank an 18-month exemption from risk-based leverage and capital requirements, the GAO said. The central bank also took on troubled mortgage assets off the Bear Stearns balance sheet before the acquisition. Potential conflicts of interest ran the other way as well. At the end of 2008, the New York Fed approved Goldman Sachs (GS) as a bank holding company, providing access to bargain loans from the reserve. Stephen Friedman, then chairman of the New York Fed, also sat on the board of directors at Goldman and even owned shares of Goldman stock, which was prohibited by conflict of interest regulations, the GAO said. The Fed was urged to document the roles and responsibilities of the directors and what their restrictions on supervision and regulation involvement would be. The GAO did find the directors have a limited role on rulemaking, but existing bylaws do not document what their roles clearly are. Waivers to eligibility and ethics' policies, along with charters, memberships and bylaws should be made public, the GAO recommended. "The Federal Reserve Board agreed with GAO's recommendations and said that it believes all have merit and will work to implement them," the agency said. "The Reserve banks also said that they will give serious consideration to implementing the recommendations." Additionally, the GAO said the Fed should urge its group of regional banks to consider how to broaden pools of potential candidates. Officers below the senior executive level should be included, the agency said, in order to diversify their boards. For instance, of the 108 members making up the nine-member boards at the 12 regional Fed banks, 78 were white men, elected by banks to represent their interests. Write to Jon Prior. Follow him on Twitter @jonaprior.