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see ya, steph

May 7, 2009

From the USA Today:

Stephen Friedman, chairman of the board of the Federal Reserve Bank of New York, resigned Thursday, over questions about his ties to financial powerhouse Goldman Sachs.

In a letter to Fed officials, Friedman said, “Today, although I have been in compliance with the rules, my public service motivated continuation on the Reserve Bank Board is being mischaracterized as improper. The Federal Reserve System has important work to do and does not need this distraction.”

Earlier this week, The Wall Street Journal raised questions about the influence of Goldman Sachs, whose board Friedman sits on, in shaping Washington’s response to the financial crisis.

“The Federal Reserve Bank of New York 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.

“During that time, the 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,” the Journal story said.

Cheers to the Wall Street Journal, among others, for bringing up the potential conflict of interest posed by New York Federal Reserve Chairman Stephen Friedman’s relationship with Goldman Sachs, forcing him to resign.

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