Stephen Friedman resignation ends a "small" conflict of interest
Stephen Friedman finally resigned as had of the New York Federal Reserve Bank. He came under media scrutiny because he was a former Goldman guy who still owned shares of stock in GS, even as he served as head of the NY Fed. Not only that, but he bought additional shares of the stock while he was Fed head. The Wall Street Journal was concerned that his actions may have compromised the independence of the Fed.
When he resigned, he assured everyone he had executed his duties at the Fed objectively and that there was no conflict of interest. An editorial in the Wall Street Journal kind of soft-played the resignation, referring to Friedman as a "straight-shooter" - implying there was no way he had taken advantage of his position. They figured he was already rich, so there was no reason for him to "work the system" to his advantage.
Even if we accept the Journal's conclusion, this all strikes us as "elitist" thinking.
Goldman had petitioned the government to be re-classified as a "commericial" bank. They were an investment bank before. As a commercial bank, Goldman then came under direct regulatory supervision of the Fed - which was not the case when they were an investment bank. In addition, the government gave $5 billion directly to Goldman. (They claimed they didn't really need the cash - but took it anyway).
Friedman bought 37,000 shares of Goldman stock while he was instrumental in facilitating a $5 billion injection of taxpayer money into the company. Friedman, as head of the New York Fed, would have had jurisdiction over his old firm. He should have either resigned as NY Fed head, or sold his GS stock.
Why didn't he? He was given an exemption by the Fed! Instead, he made an estimated $3 million from the trade once Goldman's stock recovered.
Are we to believe he was oblivious to the possibility of personal gain? Wait...I guess the "mere" $3 million doesn't count in the world of rich elites like Friedman. It's not enough for us to even entertain the thought that his actions were self-serving.
I've met dozens of people like Mr. Friedman. I suspect he really doesn't think there was any conflict of interest involved in any of his actions.
What do you think?
When he resigned, he assured everyone he had executed his duties at the Fed objectively and that there was no conflict of interest. An editorial in the Wall Street Journal kind of soft-played the resignation, referring to Friedman as a "straight-shooter" - implying there was no way he had taken advantage of his position. They figured he was already rich, so there was no reason for him to "work the system" to his advantage.
Even if we accept the Journal's conclusion, this all strikes us as "elitist" thinking.
Goldman had petitioned the government to be re-classified as a "commericial" bank. They were an investment bank before. As a commercial bank, Goldman then came under direct regulatory supervision of the Fed - which was not the case when they were an investment bank. In addition, the government gave $5 billion directly to Goldman. (They claimed they didn't really need the cash - but took it anyway).
Friedman bought 37,000 shares of Goldman stock while he was instrumental in facilitating a $5 billion injection of taxpayer money into the company. Friedman, as head of the New York Fed, would have had jurisdiction over his old firm. He should have either resigned as NY Fed head, or sold his GS stock.
Why didn't he? He was given an exemption by the Fed! Instead, he made an estimated $3 million from the trade once Goldman's stock recovered.
Are we to believe he was oblivious to the possibility of personal gain? Wait...I guess the "mere" $3 million doesn't count in the world of rich elites like Friedman. It's not enough for us to even entertain the thought that his actions were self-serving.
I've met dozens of people like Mr. Friedman. I suspect he really doesn't think there was any conflict of interest involved in any of his actions.
What do you think?
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