Widening political morass

New York - Stephen Friedman (above left), the chairman of the New York Fed, has resigned from the post Thursday amid questions about his continuing ties to Goldman Sachs. The highly profitable New York Fed is owned not by the government but by some of America’s largest banks, e.g. Goldman Sachs. 

ABCD

Friedman was allowed to lead the New York Fed and remain a Goldman director and shareholder, in violation of Fed policy because of Goldman’s new status as a bank holding company. The New York Fed sought a one-year waiver of that rule, which was granted by Federal Reserve Chairman Ben Bernanke (above right) and Vice Chairman Donald Kohn (below left) in January. While the waiver was under consideration, in December, Friedman bought 37,300 more Goldman shares. He also bought more shares the day after the waiver came through. The purchases, which gave him a $3 million gain.  
 ABC
Friedman, a longtime star of the financial world, was economic adviser to former President George W. Bush. The bulk of his career was spent at Goldman Sachs, where he held numerous executive roles, along with his longtime friend Robert E. Rubin (below right). He is a member of the Council on Foreign Relations.