Sorry for the short diary, but this just broke a few minutes ago and I haven't seen anything else on it here. But according to various news sources including the NY Times:
Stephen Friedman, the chairman of the New York Federal Reserve Board, abruptly resigned on Thursday, days after questions arose about his ties to Goldman Sachs.
He had been expected to depart by year's end, but this abrupt resignation was sudden and unexpected. Although, given his massive conflict of interest issues that may verge on the criminal (at least to this non-lawyer), I can see why he quit suddenly.
Perhaps he's gotten a call from the White House or DoJ?
The full, brief article below the fold.
Friedman Resigns as Chairman of New York Fed
May 7, 2009, 5:57 pm
Stephen Friedman, the chairman of the New York Federal Reserve Board, abruptly resigned on Thursday, days after questions arose about his ties to Goldman Sachs.
Mr. Friedman was chairman of the New York Fed at the same time he was a member of Goldman’s board. He also had a substantial stake in the firm as the Fed was crafting a solution to keep Wall Street banks afloat. Denis M. Hughes, deputy chair of the board, will take over as the interim chairman, the New York Fed said in a statement.
...
Because the New York Fed approved a request by Goldman to become a bank holding company, the chairman’s involvement in Goldman was a violation of Fed policy, The Wall Street Journal said in an article earlier this week.
The New York Fed asked for a waiver, which, after about two and a half months, the Fed granted, the newspaper said. During that time, Mr. Friedman bought 37,300 more Goldman shares in December, which have since risen $1.7 million in value.
...
He actually bought Goldman stock while head of the NY Fed, AFTER the meltdown happened and the TARP program went into effect!!! I guess it would be hard to run the NY Fed from a jail cell.
No wonder Bernanke didn't want to release the names of banks receiving Fed help. I wonder if he's going to be under investigation too. Sounds like he should be. Wasn't he Friedman's boss?
Update: Per Seneca Doane, who also has a diary up on this story, here a link to Friedman's letter of resignation, and to a Slate article by Eliot Spitzer on this matter:
The kerfuffle about current New York Federal Reserve Bank Chairman Stephen Friedman's purchase of some Goldman stock while the Fed was involved in reviewing major decisions about Goldman's future—well-covered by the Wall Street Journal here and here—raises a fundamental question about Wall Street's corruption. Just as the millions in AIG bonuses obscured the much more significant issue of the $70 billion-plus in conduit payments authorized by the N.Y. Fed to AIG's counterparties, the small issue of Friedman's stock purchase raises very serious issues about the competence and composition of the Federal Reserve of New York, which is the most powerful financial institution most Americans know nothing about.
A quasi-independent, public-private body, the New York Fed is the first among equals of the 12 regional Fed branches. Unlike the Washington Federal Reserve Board of Governors, or the other regional fed branches, the N.Y. Fed is active in the markets virtually every day, changing the critical interest rates that determine the liquidity of the markets and the profitability of banks. And, like the other regional branches, it has boundless power to examine, at will, the books of virtually any banking institution and require that wide-ranging actions be taken—from raising capital to stopping lending—to ensure the stability and soundness of the bank. Over the past year, the New York Fed has been responsible for committing trillions of dollars of taxpayer money to resuscitate the coffers of the banks it oversees.
Given the power of the N.Y. Fed, it is time to ask some very hard questions about its recent performance. The first question to ask is: Who is the New York Fed? Who exactly has been running the show? Yes, we all know that Tim Geithner was the president and CEO of the N.Y. Fed from 2003 until his ascension as treasury secretary. But who chose him for that position, and to whom did he report? The N.Y. Fed president reports to, and is chosen by, the Fed board of directors.
Thanks SD!
Update 2: Some commenters were complaining that I posted the entire article, even though it was a very short one with only 6 paragraphs. So to stay in technical compliance with this site's fair use policy, I took out a few sections. Everyone happy now? :-P