A secret agreement that was enacted five years ago at the Federal Reserve has just come to light. Known as the 'Triangle Document,' it purports to take away regulatory power from the New York Fed branch – long known as the most important outpost for the private quasi-government institution – and put it in the hands of the Fed's Board of Governors in Washington, D.C.

Until 2010, when the document was produced, the big banks essentially enjoyed self-regulation, with significant power over the board.

Class A and Class B NY Fed board members are elected directly by member banks, with Class C members in turn elected by the board (not much different, really). JPMorgan Chase CEO Jamie Dimon – intricately involved in the post-2008 bailout controversy –  was the Class A director for the New York Fed board for six years until his term expired in 2013.

For Big Banks and the Federal Reserve, it was a sweetheart fox-guarding-the-henhouse arrangement that the public was never meant to fully understand.

The Wall Street Journal's Jon Hilsenrath broke the story:

The Federal Reserve Bank of New York, once the most feared banking regulator on Wall Street, has lost power in a behind-the-scenes reorganization at the nation's central bank.