MAY 4, 2009 USA Inc.: The State of Capitalism
New York Fed Chairman's Ties to Goldman Raise Questions
Are you kidding me? So here is the gist of this story...
"...New York Fed's chairman, Stephen Friedman, sat on Goldman's board and had a large holding in Goldman stock, which because of Goldman's new status as a bank holding company was a violation of Federal Reserve policy.SAY WHAT?
The New York Fed asked for a waiver, which, after about 2½ months, the Fed granted. While it was weighing the request, Mr. Friedman bought 37,300 more Goldman shares in December. They've since risen $1.7 million in value."
No, it gets better, seriously!
"The Federal Reserve Bank of New York [on which Mr. Friedman sat] shaped Washington's response to the financial crisis late last year, which buoyed Goldman Sachs Group Inc. and other Wall Street firms. Goldman received speedy approval to become a bank holding company in September and a $10 billion capital injection soon after."But, that's not all...
"Mr. Friedman also was overseeing the search for a new president of the New York Fed, an officer who has a critical role in setting monetary policy at the Federal Reserve. The choice was a former Goldman executive."Read that again.... How did he get away with that? Hint: Remember lil' Timmy Geithner? Yeah, now you're starting to get the picture!
"Last fall, then-New York Fed President Timothy Geithner was President-elect Barack Obama's choice to head the Treasury, and New York Fed officials say that to have forced Mr. Friedman off the board while it sought a Geithner successor would have deprived it of two leaders at a crucial time.Just like lil' Tim, Mr. Friedman was too important for the rules to apply to HIM.
"Steve Friedman is a very capable chairman," said Tom Baxter, the New York Fed's general counsel, "and was the kind of person who we needed to head the search" for someone to succeed Mr. Geithner.
In Washington, the Fed's general counsel, Scott Alvarez, also says Mr. Friedman was needed during the New York Fed's transition."
"Rules? We don't need no stinkin' rules! Rules are for the little people. They do not apply to us! " I can hear them saying this as they laugh all the way to the bank... Probably an offshore bank...
Of course, there is an explanation:
"Because he was wasn't allowed to own the stock he had, the Fed doesn't consider his additional December purchase to be at odds with its rules at the time. The Fed had no policy requiring directors to inform it of new stock purchases, and Mr. Friedman didn't. The Federal Reserve Board is now in the process of rewriting its rules for handling situations like Mr. Friedman's."That is typical convoluted civil servant governmental logic if I have ever heard it!