NY Federal Reserve Chairman Resigns Suddenly
Wow, that has to be a record for shortest tenure ever at the NY Fed.
His resignation letter (below), is as Dealbook notes, rather disingenuous:
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. (Read Mr. Friedman’s letter after the jump.)
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
Friedman’s Resignation Letter From N.Y. Fed
>
Sources:
Friedman Resigns as Chairman of New York Fed
Dealbook, May 7, 2009, 5:57 pm
http://dealbook.blogs.nytimes.com/2009/05/07/friedman-resigns-as-chairman-of-new-york-fed/
Fed Dread
The New York Fed is the most powerful financial institution you’ve never heard of. Look who’s running it.
Eliot Spitzer
Wednesday, May 6, 2009, at 12:29 PM
http://www.slate.com/id/2217811
Friedman Quits New York Fed After Goldman Purchases
Scott Lanman
Bloomberg, May 7 2009
http://www.bloomberg.com/apps/news?pid=20601087&sid=a4FkPLdeGeG4&
NY Fed chair quits over Goldman role
Tami Luhby
CNNMoney.com May 7, 2009: 7:25 PM ET
http://money.cnn.com/2009/05/07/news/economy/NY_Fed_Chair_Resigns/?postversion=2009050719
May 7th, 2009 at 8:48 pm
translation: there is no way in hell that i am giving up all the money i made on the 373k GS shares i bought last month while also running the NY fed at night.
May 7th, 2009 at 8:51 pm
what a god damned scam- only reinforces what everyone is already thinking about the whole bullshit bailout banking charade-
he should be brought up on charges for insider trading and relinquish his gains-
what a f*cking douche bag
May 7th, 2009 at 9:05 pm
Why does this story fail to surprise me?
May 7th, 2009 at 9:08 pm
I’d like to know how in the world that share purchase of his was/is legal? How? If this were some low level nobody, he/she would be made an example of by the SEC. We are indeed a Banana Republic….with nukes.
May 7th, 2009 at 9:09 pm
As the NY Fed Pres, how could he not have insider information? The guy is so far inside he can read the label on Blankfein’s fruit of looms. Dirty pool. Where is Jackie Gleason now that we really need him?
Bert Gordon: You got talent.
Fast Eddie: I got talent? So what beat me?
Bert Gordon: Character.
May 7th, 2009 at 9:13 pm
I really think that at this point so many laws have been broken (starting with the Bush administration), that the elite now realizes that nobody in the rank and file really seems to care or understand this is how business is done today (and behaves accordingly), which means they can get away with doing this kind of thing right out in the open daylight, literally right in front of us time after time after time. It’s almost like they’re mocking us doing it this way. They don’t even hide the criminality and fraud anymore. It’s just another regular day the Banana Republic of the U.S.
May 7th, 2009 at 9:24 pm
Jeff,
remember, it’s house selling season–you can always rent in the TC.
~~
“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.”
“…which have since risen $1.7 million in value”
what’s the InTrade over/under on this Guy’s Fine and/or Prison Term?
May 7th, 2009 at 9:27 pm
Nice work Steve…what’s next ? Ambassador to Monaco?? Congressional hearings w/ barney frank and carolyn maloney asking for 99% of profits ?? kind of doubt it
May 7th, 2009 at 9:35 pm
I may be beginning to get it… The whole banana republic crack is not just a crack. I mean I’ve got gold but sooner or later we may all need to “get physical” and I’m not talking about Olivia Newton John.
http://www.youtube.com/watch?v=VQXECBdPgEA
May 7th, 2009 at 9:37 pm
I think what’s next is that AG Cuomo reprises the Spitzer perp walk with this asshat.
At least, I hope that’s what’s next.
May 7th, 2009 at 9:37 pm
Stephen got caught with his hand in the cookie jar. Sadly he’ll get away with eating the cookie in a fancy mansion as well. I used to be against the death penalty, but for the masters of the universe that wrecked the economy it might work as a deterrent.
May 7th, 2009 at 9:38 pm
The power of Kudlow.
May 7th, 2009 at 9:40 pm
@Hoffer: I place the over/under at zero. Goldman people are above the law, excuse me, ARE the law.
May 7th, 2009 at 9:41 pm
It really does boggle the mind….the relationships between the Fed and “publicly” traded companies….all the “leaks” related to the stress tests….and their results that “beat expectations.” I never thought I would write this, but my country is very much resembling some kind of ‘banana republic,’ or third world regime. At least in those places, you KNOW everyones corrupt in some way.
May 7th, 2009 at 9:48 pm
More outrage from the peanut gallery. Mainstream America doesn’t understand or care to understand.
Odds are, this will not merit more than 5 seconds of coverage on the evening news.
They must expect our government to be hauling home suitcases of money every day after “work” as a normal activity in a free-market democracy.
Despair.com has it right. This is a Kleptocracy.
May 7th, 2009 at 9:48 pm
Thomas C. Baxter, Jr., executive vice president and general counsel, said, “There is no doubt that 2008 was one of the most challenging years in the New York Fed’s history. We were fortunate to have Steve as our chairman during that time, especially in view of Mr. Geithner’s decision to accept President Obama’s nomination to become Secretary of the Treasury. When the President announced his decision to nominate now-Secretary Geithner on November 24, 2008, Steve immediately stepped into action and formed a search committee of the New York Fed’s board of directors. During the committee’s often intense deliberations over the next two months, I was privileged to observe closely Steve’s dedication, professionalism and work ethic. He was extraordinary. And, with respect to Steve’s purchases of Goldman shares in December of 2008 and January of 2009, which have been the object of some attention lately, it is my view that these purchases did not violate any Federal Reserve statute, rule or policy….”
Bio: http://www.newyorkfed.org/aboutthefed/orgchart/baxter.html
There is never only one termite.
May 7th, 2009 at 9:53 pm
And we wonder why we see the predatory and fraudulent behaviors by the rank and file in this country. They’re only following the Friedman’s of the world at the top who set the example that this is how one achieves the American Dream in this country. When criminal behavior is not only not prosecutive, but seemingly encouraged, the crap that we’ve seen over the past few decades really isn’t all surprising. It’s an enormous part of our economy today.
May 7th, 2009 at 9:55 pm
“not prosecutED” (awful typing/proofreading). I need a preview feature! I get quick on the draw when I’m irritated.
May 7th, 2009 at 10:04 pm
Mannwich, GS is not the law. Judge Dredd is the law.
http://www.youtube.com/watch?v=wvJiYrRcfQo&NR=1
Note to Friedman’s successor: This is what blind trusts are for.
I’d be happy just to see a criminal investigation at this point. Perp walk would be bonus. Usually tax issues and sexual harassment settlements with nannies turn up when investigators start poking around. Pass the popcorn.
May 7th, 2009 at 10:06 pm
Any chump can back up the truck on GS and make $1.7 million in 4 months.
But it takes a very special individual indeed to receive such glowing commendation from Thomas C. Baxter, Jr.
May 7th, 2009 at 10:06 pm
I think Elizabeth Warren nailed it when, in the prior post’s video links, she refers to the bank CEO’s as only having to talk to each other. Insulated in that manner from all the rest of us its easy to see how all these erudite pricks can think there isn’t really a conflict of interest.
May 7th, 2009 at 10:09 pm
And even if we gave him the benefit of the doubt here (which I don’t), did he even think for a second that this might look bad and that now was not the time for even the slightest appearance of impropriety? I just think it’s sheer arrogance and they don’t give a damn. They live and operate in a bubble.
May 7th, 2009 at 10:15 pm
“…One of the leading business schools in America – the Wharton School of Business – has written an essay on the psychological causes and solutions to the economic crisis. Wharton points out that restoring trust is the key to recovery, and that trust cannot be restored until wrongdoers are held accountable:
According to David M. Sachs, a training and supervision analyst at the Psychoanalytic Center of Philadelphia, the crisis today is not one of confidence, but one of trust. “Abusive financial practices were unchecked by personal moral controls that prohibit individual criminal behavior, as in the case of [Bernard] Madoff, and by complex financial manipulations, as in the case of AIG.” The public, expecting to be protected from such abuse, has suffered a trauma of loss similar to that after 9/11. “Normal expectations of what is safe and dependable were abruptly shattered,” Sachs noted. “As is typical of post-traumatic states, planning for the future could not be based on old assumptions about what is safe and what is dangerous. A radical reversal of how to be gratified occurred.”
People now feel more gratified saving money than spending it, Sachs suggested. They have trouble trusting promises from the government because they feel the government has let them down.
He framed his argument with a fictional patient named Betty Q. Public…”
http://www.washingtonsblog.com/2009/05/economy-will-not-recover-until.html
May 7th, 2009 at 10:17 pm
FED up with this yet?
The system has utterly failed US
You get all the ju$tice that you can afford
While the masses stay hypnotized, passive and bored
Sorry, I must have failed the stress test.
May 7th, 2009 at 10:20 pm
@Hoffer: That’s been my theory all along but there are those out there (ahem, otto) who feel now is no time for “moralizing”. We need to let the elites figure things out for the sheeple. I would argue NOW is just the time for moralizing. Trust & confidence in each other (and the system) and that we’re not being preyed upon, not a mark , if you will, at every turn, is the very basis of our system. If the basis of our system becomes gaming everything and everyone to get what each of us wants, that is a recipe for ruin, IMO.
May 7th, 2009 at 10:23 pm
hoffer-
great post
May 7th, 2009 at 10:24 pm
Jeff,
if we let the ‘elites’ figure this out, we will be served..
in the TZ-sense of ‘To Serve Man’
http://www.imdb.com/title/tt0734684/
and, this: ” that is a recipe for ruin” need not be an opinion, it is simple Fact.
May 7th, 2009 at 10:29 pm
Mannwich — chill, man — you’re gonna blow an artery. Pull out a copy of Bonfire of the Vanities and turn off the computer. Immerse in some fantasy where the Masters of the Universe get their just desserts.
May 7th, 2009 at 10:31 pm
Oh, come on. What’s a couple million? The Bush crime family stole BILLIONS!
May 7th, 2009 at 10:38 pm
Hoffer–
I want you on my team at trivia night…your ability to whip out pertinent data is great…
Semi-Meaningless aside…you used a phrase yday and previously…”that’s the ol’ Pepper”…to what does that refer?
May 7th, 2009 at 10:40 pm
The purchases didn’t violate any laws? So what?
What laws did the employees of AIG violate? They were paid retention bonuses pursuant to legallyvalid contracts to ensure they stayed on a sinking ship to clean up a mess. I’ve seen no allegations they violated any laws.
But Obama decided to stoke populist outrage against them, and publicly disgrace them, and effectively coerce many of them into giving their property back to the government, or face a confiscatory tax.
And we are to believe Friedman had no influence in the decision to funnel over $12 billion of taxpayer money through AIG so Goldman could be paid 100 cents on the dollar for their claims against AIG? Why isn’t Obama stoking the populist outrage about that raping of the taxpayer? Why isn’t Congress threatening confiscatory taxes on Goldman and the others who sucked $180 billion from the taxpayers by way of AIG?
May 7th, 2009 at 10:47 pm
@Groty
AIG was hardly peanuts.
AIG reveals $454 million in 2008 performance bonuses
http://www.reuters.com/article/newsOne/idUSTRE5446VC20090505
May 7th, 2009 at 10:53 pm
[...] original post here: NY Federal Reserve Chairman Resigns Suddenly Leave a comment | [...]
May 7th, 2009 at 10:55 pm
AT,
funny enough, I had just come across that piece that I posted..a bit of Synchronicity at play, I’d imagine.
that, “That’s the ol’ Pepper” is from a Warner Bros. cartoon where BB is playing all 9 positions on the Diamond. And, as Catcher, after being driven to the Backstop by a Fastball he just threw as Pitcher, comes back chattering “That the ol’ Pepper~!”
not exactly sure of the name of the episode..
as an aside, in Jr. High we had a Math Teacher that went by the name of Dr. Zog, was Valley-wide, and then some, famous for Trivia–ran the Trivia Club..from him, “See the Structure, understand the Taxonomies, Similiarities flow through all fields”–the Dude was Radical.
May 7th, 2009 at 10:57 pm
the FBI/Justice should be investigating the Fed and the SEC. It’ll never happen. BTW: Just who the hell is running the FBI nowadays? Probably a banker.
May 7th, 2009 at 11:01 pm
guys, I know everyone is a bear here {BR: Not even close] but if your a bear on the US, the USD, etc,
you guys holding cash are contradicting yourself
May 7th, 2009 at 11:06 pm
found it: http://www.batigers.net/BaseballBugs.html
funny, many parallels..
May 7th, 2009 at 11:07 pm
hoffer-
episode- “Baseball Bugs”
http://www.youtube.com/watch?v=hk4ESXaquSQ
May 7th, 2009 at 11:08 pm
man hoffer- you are fast to the draw
May 7th, 2009 at 11:20 pm
ahab,
thanks for the assist~
May 7th, 2009 at 11:25 pm
Test
May 7th, 2009 at 11:28 pm
@MEHL How do you do that?
May 7th, 2009 at 11:29 pm
@MA: Robert Mueller is Dir. of FBI. According to his bio, oddly enough he specialized in white collar crime.
May 7th, 2009 at 11:43 pm
everything i learned in life i learned from Warner Bros cartoons….
http://www.youtube.com/watch?v=tZIuacRxhXY (starting at 2:30 Bugs becomes GS, WFC, BAC, CIT etc…)
and
http://www.youtube.com/watch?v=frQxsuCiJJ8 (Daffy becomes GS, WFC, BAC, etc & takes on Al Quaida)
May 7th, 2009 at 11:48 pm
Once again, we have insight into the mindset of those running the banking cartel. In their eyes, we’re just stewards of their money. Simon Johnson was correct, there has been a coup. Pitchfork time!
May 7th, 2009 at 11:50 pm
Politicians and corporate America (especially the bankers) are sleeping together. We have the best government money can buy. Kids form average American families are dieing everyday in the Mid East in order to protect politicians and bankers who in turn, fraudulently pick pocket their parents 401K’s. There is only one thing that will stop this and I’m afraid it’s coming.
May 8th, 2009 at 12:10 am
US PHX,
to which are you referring?
Pat G.,
it’s a lot like that, isn’t it?
and, from MSM, after 2003, one could hardly tell there was a War on..
but, like this: http://mindsignpost.blogspot.com/ & http://mindsignonline.com/about_mindsign.html
we get the ‘new ‘n improved’ old-fashioned ‘rat in the maze’ treatment..
May 8th, 2009 at 12:12 am
http://memory.loc.gov/cgi-bin/query/r?ammem/cool:@field(NUMBER+@band(mh05))::bibLink=S?ammem/coolbib%3A@OR(@field(TITLE+@od1(Stuart+Chase+Papers+++Theodore+Dreiser+and+Stuart+Chase+Correspondence+on+the+Subject+of+Consumer+Purchasing+Power+and+Corporate+Profits+))+@field(ALTTITLE+@od1(Stuart+Chase+Papers+++Theodore+Dreiser+and+Stuart+Chase+Correspondence+on+the+Subject+of+Consumer+Purchasing+Power+and+Corporate+Profits+)))
May 8th, 2009 at 12:17 am
http://memory.loc.gov/cgi-bin/query/D?coolbib:3:./temp/~ammem_eC59::
SUMMARY
Typed letters between Theodore Dreiser (original letter dated January 29, 1932) and Stuart Chase (carbon of February 12, 1932 letter) provoked by Chase’s critical review of Dreiser’s book Tragic America. Using data from the late 1920s, Chase deferentially debates the accuracy of Dreiser’s statistics on unemployment and the number of millionaires “plaguing” society, and takes issue with Dreiser’s claim that “the [fluctuation of the business] cycle is deliberately fostered by bankers and great corporations, who welcome depressions because they find opportunity to cut wages and thus increase bank reserves and stock holders’ profits.” Selections reproduced as facsimile page images: 4 pages.
May 8th, 2009 at 12:29 am
Transor,
Dreiser was right, and a great author.
see: http://blogcritics.org/books/article/book-review-the-financier-by-theodore/
he knew that Topic inside, and out.
Dude is way underappreciated..
May 8th, 2009 at 12:35 am
OT, but I guess we’re already there, eh?
About GDP, and something that’s been bothering me, but I couldn’t quite put my finger on it, with regard to what the market “should do” in relation to a “recovery” as defined by GDP growth.
First of all it’s highly influenced by the inventory bounce, which will be pretty big due to the extreme drawdown. But as we’ve discussed ad nauseum this is not just a run of the mill inventory surplus/rate increase recession. So why should the market react as if it is?
Interesting discussion over at naked cap (not sure if this link will work):
https://www.blogger.com/comment.g?blogID=3782644139927778760&postID=6214647347072414542&isPopup=true
Point is made about the inadequacy of GDP as a measure of the economy’s health because it’ analogous to a P&L statement while ignoring the balance sheet. So the stock market surging due to the anticipation of GDP growing is like running up the bank stocks due to their operating earnings. And that’s just what we’ve had here.
But once the balance sheet (i.e. real measure of health) is considered, you realize just how sick the entity is. And what that portends for future growth and prosperity.
May 8th, 2009 at 12:41 am
@MEH: I was referring to the Bugs Bunny cartoon. What else would capture my interest?
You have this uncanny ability to open up the archives and share it with us. Do you ever sleep?
May 8th, 2009 at 12:59 am
Hamlin Memorandum and Diary Extracts, Showing Federal Reserve Board Response to 1927 Recession and Stock Market Speculation: July 1, 1927 – January 4, 1929. From the Charles Hamlin Papers
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
http://memory.loc.gov/cgi-bin/query/r?ammem/cool:@field(DOCID+@lit(mn022))
May 8th, 2009 at 12:59 am
“During that time, Mr. Friedman bought 37,300 more Goldman shares in December, which have since risen $1.7 million in value.”
What a guy. Have they named a Middle School for him yet?
May 8th, 2009 at 1:02 am
US PHX,
sleep? sure. a lot of it is thanks to the i-net. we should take the EPIC & EFF boys seriously, many want to shut this thing down…
http://www.eff.org/
http://epic.org/
May 8th, 2009 at 3:18 am
Goldmans latest bonus bears The Mark of the Beast seems fitting
http://www.independent.co.uk/news/business/analysis-and-features/666-goldmans-latest-bonus-bears-the-mark-of-the-beast-1677853.html
May 8th, 2009 at 3:27 am
is anyone really surprised at this point? This whole thing is a farce, and a scam. The latest. Use the stock market to recapitalize the banks. Squeeze shorts, get banks up 200 and 350% or so in 8 weeks, instill confidence, and then issue shares! Brilliant!
Come on people!!
May 8th, 2009 at 3:55 am
It’s the United States of Goldman Sachs.
They should all be clapped in irons, but that ain’t ever going to happen.
Our reps are bought and sold by their masters, who they obediently serve.
American’s sit on their hands at their own peril.
May 8th, 2009 at 4:38 am
Bush I and II were military industrial complex presidents
Obama is the banking industry president
For the People, by the People is LONG GONE
May 8th, 2009 at 5:39 am
[...] Motives Behind Statements of Financial Experts (SA) NY Federal Reserve Chairman Resigns Suddenly (The Big Picture) Related PostsNo related posts. 0 Comments Read [...]
May 8th, 2009 at 5:41 am
“Americans’ trust in the financial system has been “shattered” in the past 18 months.We’re going from a world in which folks at the top only talked to each other, and maybe their regulators on occasion.It was a very quiet and very private conversation involving billions of dollars. Once you take taxpayer money…. it’s a three-way conversation.”
- Elizabeth Warren, Harvard law professor who chairs the Congressional Oversight Panel.
“It really does fit the thesis of The Shock Doctrine,” said Naomi Klein referring to her book in which she exposes how governments and powerful corporations use disasters and upheavals to gain even more power. Almost $12 trillion is being spent to bail out the financial sector compared to only about $1 trillion being spent on economic stimulus.
“My real concern is — has been my concern from day one — is that the crisis on Wall Street, created by deregulated capitalism, is not actually being solved,” continued Klein. “It’s being moved. A private sector crisis is being turned into a public sector crisis.”
http://bit.ly/cX66J
Bernanke calls for revamped banking oversight
WASHINGTON – Federal Reserve Chairman Ben Bernanke on Thursday called for a holistic approach to strengthening oversight of the banking system to prevent future financial crises.
Holy mackeral ! up is down, black is white, America is one big ponzi scheme
The ministry of disinformation in Bush admin was so transparent and comical but these guys in the Obama admin think they are being taken seriously ?
May 8th, 2009 at 7:27 am
Emblematic episode which mimics behavior of elites in politics, sports and all other aspects aspects of American culture. I think people have become desensitized to it so it continues. At least Manny got suspended for 50 games. What will happen to this guy? Disgorgement of profits? Lets hope so.
What will happen to Bush/Cheney for lies/torture?
May 8th, 2009 at 8:12 am
They don’t even hide the criminality and fraud anymore. It’s just another regular day the Banana Republic of the U.S.
————
They don’t have to. When nearly everyone had skeletons in the closet, who’s going to blow the whistle?
May 8th, 2009 at 8:14 am
@Moss: I doubt that much will happen at all. news coverage is really light on this story so I’m sure this guy will skate, like the rest.
May 8th, 2009 at 8:28 am
Sad before, said again: we live in one of the most corrupt times in US history, as bad as or worse than the Grant years and the Harding years. The favoritism, cronyism, pork, grease, insider dealing and direct, open stealing are beyond anything seen in our lifetime and are as bad as any tinpot 3rd world country.
May 8th, 2009 at 9:21 am
Word of the day:
“Macroprudential”, as in:
“Looking forward, I believe a more macroprudential approach to supervision–one that supplements the supervision of individual institutions to address risks to the financial system as a whole–could help to enhance overall financial stability. Our regulatory system must include the capacity to monitor, assess, and, if necessary, address potential systemic risks within the financial system. Elements of a macroprudential agenda include…”
(from Bernanke’s speech yesterday)
Definition:
Macroprudential: Doing whatever it is that Goldman Sachs needs done in order to ensure the financial system it created to benefit itself is never compromised
May 8th, 2009 at 10:08 am
@theseeker Says: May 8th, 2009 at 8:14 am
I doubt that much will happen at all. news coverage is really light on this story so I’m sure this guy will skate, like the rest.
Just watch and learn. Big stories that start out on Barry’s site are usually front page news on the MSM in 6 months to a year. You are seeing the future
May 8th, 2009 at 10:09 am
Macroprudential:
Sounds more like a leveraged buyout
May 8th, 2009 at 11:42 am
Macroprudential= “persistent surveillance” of the Financial infrestructure.
168. Track n’ Trace is “Change we can believe in.”
May 8th, 2009 at 12:44 pm
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