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Congress Demands Explanation From Bernanke On Why Goldman And Ex-Fed Board Member Stephen Friedman Illegally Bought Shares Of Goldman In December 2008
Congress is pretending to be investigating yet more criminality out of Goldman and out of the New York Fed, and specifically the nexus where the two streams intersect (aside from private room meetings at assorted Financial District restaurants) - Goldman's very own/the Fed's very ex-own, Stephen Friedman. We can't wait to see how quick before this investigation quietly disappears. Pay particular attention to rhetorical question #13: " 13. Has the Federal Reserve investigated whether Goldman Sachs or Mr. Friedman benefitted financially from Mr. Friedman serving as Chairman of the Board of the New York Fed?" Duh.
Below is the full letter from Edolphus Towns, Chairman of the Committee on Oversight Committee on Oversight and Government Reform to Ben "Capo di tutti capi" Bernanke
Dear Chairman Bernanke:
We write you in connection with the House Oversight and Government
Reform Committee's hearings on the federal bailout of American
International Group (AIG). The Committee is the principal oversight
committee in the U.S. House of Representatives, with jurisdiction over
"any matter." Under Rules X and XI of the Rules of the House of
Representatives, the Committee is investigating this matter further.
As you may recall, in the fall of 2008, at the height of the
financial crisis, Mr. Stephen Friedman served both as a member of the
Board of Directors of Goldman Sachs and as Chairman of the Board of
Directors of the Federal Reserve Bank of New York (New York Fed). In
September 2008, Goldman Sachs converted from an investment bank into a
bank holding company, making the New York Fed its primary regulator. At
the time of the conversion, Mr. Friedman owned approximately 46,000
shares in Goldman.
Notably, under a long-standing policy of the Board of Governors of
the Federal Reserve System (Federal Reserve), Mr. Friedman was
prohibited from owning shares of any company under the supervision of
the Federal Reserve. Despite the clear prohibition and apparent conflict
of interest, Mr. Friedman requested a waiver from the Board of Governors
in Washington and was allowed to continue serving as chairman, in direct
violation of Fed policy, until a decision on the waiver was made.
In the meantime, on December 17, 2008, despite the prohibition, Mr.
Friedman bought an additional 37,000 shares of Goldman Sachs, a company
that was under the supervision at the New York Fed. A waiver was granted
by the Board of Governors on January 21, 2009.
It is also noteworthy that at the time of Mr. Friedman's dual role,
the New York Fed was actively considering the possibility of paying tens
of billions of dollars in taxpayer funding to AIG's credit default swap
counterparties, including Goldman. In Goldman's case, this counterparty
payment was made in November of 2008 and it amounted to roughly $13
billion, courtesy of the American taxpayer.
What makes these transactions and the waiver that the Federal
Reserve granted Mr. Friedman even more troubling is that the precise
financial exposure Goldman faced from AIG was not publicly known when
Mr. Friedman bought the Goldman stock in December of 2008. Indeed, the
precise amount AIG paid Goldman was not released until March of 2009,
after Congress placed considerable pressure on the Federal Reserve to
disclose that information.
Mr. Friedman's dual role at the New York Fed and Goldman, his
purchase of the Goldman stock in December 2008, and the Federal
Reserve's waiver of its conflict of interest policy after the fact,
raise serious questions about the integrity of the Fed's operations.
The Committee on Oversight and Government Reform received testimony
from Mr. Friedman at a hearing on January 27, 2010, but key questions
remain unanswered.
Please provide written answers to the following questions:
1. What is the official Federal Reserve policy on ownership
of stock by members of the Boards of Directors of the regional Federal
Reserve banks?
2. What measures has the Federal Reserve adopted to ensure
that the policy is enforced?
3. Who is currently responsible for board member compliance
with applicable stock ownership prohibitions and conflict of interest
policies at the Federal Reserve?
4. Who was responsible for board member compliance with stock
ownership and conflict of interest policies at the Federal Reserve
during the time that Mr. Friedman served as a board member at the New
York Fed?
5. When and how did the New York Fed and the Federal Reserve
become aware that Mr. Friedman was in violation of Federal Reserve
policy on ownership of stock?
6. When the New York Fed and the Federal Reserve became aware
that Mr. Friedman was not in compliance with Federal Reserve policy, why
wasn't Mr. Friedman asked to resign or forced to remove the conflict by
selling the Goldman shares he already owned?
7. What was the basis for the decision by the Federal Reserve
to grant Mr. Friedman this waiver in light of the obvious conflict
presented by his role at the New York Fed and his simultaneous role as a
Goldman director and shareholder?
8. What were the terms and conditions of the waiver granted
by the Federal Reserve to Mr. Friedman?
9. Prior to granting the waiver, did the Federal Reserve
investigate to determine what non-public information Mr. Friedman may
have had access to by virtue of his positions on both the Goldman Board
of Directors and as Chairman of the New York Fed Board of Directors?
10. Was Mr. Friedman told by anyone at the New York Fed or at the
Federal Reserve that he should proceed as if the waiver had been
granted, even though the waiver was not issued until after he purchased
the Goldman stock? If he was so instructed, who gave Mr. Friedman this
instruction and why?
11. Did the waiver the Federal Reserve issued Mr. Friedman in
January 2009 explicitly permit him to purchase additional shares of
Goldman?
12. When the Federal Reserve made the decision to grant Mr.
Friedman the waiver in January 2009, was it aware that Mr. Friedman had
purchased the additional 37,000 Goldman shares a month earlier?
13. Has the Federal Reserve investigated whether Goldman Sachs or
Mr. Friedman benefitted financially from Mr. Friedman serving as
Chairman of the Board of the New York Fed?
14. Has the Federal Reserve investigated whether Mr. Friedman
benefitted financially from his purchase of 37,000 shares of Goldman
Sachs shares while he served as Chairman of the Board of the New York
Fed? If so, has the amount of financial benefit been determined?
In addition, please provide copies of the following records:
15. All records in the care, custody, or control of the Federal
Reserve relating to Mr. Friedman's purchases of Goldman stock in
December 2008 and January 2009.
16. A copy of the specific provision of Federal Reserve policy
that prohibited Mr. Friedman from serving on the New York Fed while
owning shares of a company subject to Fed supervision.
17. All records relating to the Federal Reserve's decision to
grant Mr. Friedman a waiver that allowed him to serve as Chairman of the
New York Fed while also owning millions of dollars of stock in a company
that was supervised by the Federal Reserve.
18. Copies of all waiver requests submitted by members of the
boards of directors of the regional Federal Reserve banks to the Federal
Reserve during the past ten years in connection with the prohibition
against ownership or purchase of stock, or options to purchase stock, in
an entity supervised by the Federal Reserve, along with copies of all
decisions to grant or deny such requests.
Please deliver the requested information and records to the
Committee on Oversight and Government Reform, room 2157 Rayburn House
Office Building, no later than 12:00 noon on Thursday, March 25, 2010.
To facilitate delivery and review, we prefer that the records be
delivered in digital form. Please note that the terms "records" and
"relating to" are defined in the attachment to this letter.
Should you have any questions about this request or need additional
information, please contact Committee staff at 202-225-5051, or Cara
Camacho of Congressman Lynch's staff at 202-225-8273.
Edolphus Towns Stephen Lynch
Chairman Member
Committee on Oversight Committee on Oversight and Government Reform
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The guy should be sharing a cell with Madoff
And they moan about China and currency manipulation??
I dislike both the criminal organization that is the Fed and the CPC's RMB policy. It is possible to hold two thoughts at the same time.
the Fed just gave itself a "waiver". LoLz. bizarro world.
Short answer: "Because he COULD, motherfuckers"
yuuuuup. cant say it better than that.
It's only a matter of time before the FED chair just comes out and says: "Congressman, how are the wife and kids? Everything OK? You seem upset. Are you worried about their health?".
It's worse than the mafia.
7. Goldman Sachs is the most important institution in the country. As goldman provides the means for major corporations and Sovereign nations to commit balance sheet fraud, on what at one time was an unimaginable scale, it is absolutely neccessary that it continue to operate profitably. Therefore, the chairman owning shares provides him with the proper motivation...To make sure that goldman makes money. Whats the problem here?
SCUMBAGS. The band of thieves need to be locked up for counterfeiting, insider trading, and larceny.
Quick Friday Pop Quiz:
What do the following office holders have in common?
1. Federal Reserve Board Chairman (and his predecessor)
2. US Treasury Secretary (and his predecessor)
3. SEC Chairman
4. CFTC Chairman
5. IMF chief
6. Bank of England President
7. World bank chief
8. ECB chief
9. Swiss National Bank chief
10. TBTF bank chief executives
They have all been circumsized?
I have often wondered how many foreskins attend GS boardmeetings. I bet at least 70% are bereft.
Are you sure 30% of GS Board members are women? I didn't think it was that high...
As are most WASP's, to address the "point" here.
"They have all been circumcised?"
Only if some one kicked Timmay Giethner in the jaw...
Momma said I was "slow" as a child so it took a few seconds for this one to "kick" in.
Hilarious genius. :>))
Funniest shit I've ever read on ZH! Pure gold!
And for every 25 circumcisions you send them in and get another little prick with an Israel passport.
goldmanites, jews,CFR .
Part of the myth creation and support process. Most people don't understand that many "official investigations" are specifically started with the intention of transforming false "facts" into "truth" simply because they were validated and blessed by the official investigation.
It's the Repo 105 equivalent in the "official" political corruption perpetuation process. Move a lie off the balance sheet, launder it by the investigation and return it to the public as a clean and shiny truth, brought to you by the unbiased and completely independent investigatory body of upstanding citizens who couldn't and most certainly wouldn't lie about anything.
The Warren commission, the 9/11 commission, you get the idea.
You'll like this:
http://www.takimag.com/site/article/american_naifs_bringing_ruin_to_othe...
Paul Craig Roberts, a real American hero.
Fully up to speed on this but thanks for the link. Ironically, if more people place these links out there, it becomes more believable in the public mind. Group think herd mentality works in both directions.
"The Warren commission, the 9/11 commission, you get the idea."
Unfortuneatley CD, the Amerikan public DON'T get the idea. They buy the Myth Narrative hook line and sinker.
The Amerikan Public Hate Dissenters
It ruins all their little dreams of glory... "I too can become a Billionaire in Amerika"
Wave little Amerikan flags here....
Insert slogans here...
Nothing like mindless sound bite sloganeering for the masses to chant...
"Support the Troops"... "Wall Street has more because they are better than me"... "Celebrities are the news"... "I believe everything on teevee the NBC's tell me"... "Four legs good, two legs bad"...
The Amerikan public have been sold bullshit for generations now. They buy every ounce of it gleefully. My dad used to tell me, "If you don't want to eat shit, don't take the first mouthful."
Well Amerika, Wall Street has ANOTHER giant shit sandwich for you.
What are you going to do about it? Bon appetit...
"Unfortunately CD, the Amerikan public DON'T get the idea. They buy the Myth Narrative hook line and sinker."
I agree. I've been talking about this in my "End of Empire" articles. The questions are thus. What do we do about this? Do we do anything? Should we do anything? Is there anything we can do? What if we pop our heads up above the safety of the berm in front of us and get picked off by the increasingly militarized state? It is clear dissent is being clamped down on. But if we don't do anything, who will? Why would anyone stick their head out of their own personal foxhole if no one else will follow? Etc, etc, etc.
All good questions that must be examined. The last thing we should do is accept that we are powerless.
This style of rhetoric is not helpful. It is neither clever or meaningful to replace the "c" with a "k". You accomplish nothing.
Now, AmeriCans are a product of their society. Most people have an average IQ (within an average range) and accept the world as it is constructed for them. The very process of imagining a reality or a narrative (I hate that word) that is different is beyond the processing power of the average peasant. It is what it is.
As such, our beef is not with average AmeriCans. Our beef is with the elite that constructs the world average AmeriCans live in.
Do you understand?
You are one of my favorite posters here, CG.
Cheeky Bastard is outstanding too.
But remember kids, if you sell a small bag of blow you'll do years of hard time.
Only if it's the good stuff, right? At least that's what my connection tells me, so it must be correct. After all, why would he lie about something as serious as this?
Unless you fly in a few metric tons from Bolivia. Then you get promoted up the intel chain.
Do most companies have a requirement that directors own at least a minimal amount of stock? Granted, this appears to be more than meeting with corporate governance requirements.
Wouldn't being a director of a company that your are regulating be an even larger conflict of interest than just owning its stock? Why was he even allowed in the NYFED?
Bernanke's resonse ; I am not aware of that, I'll have to get back to you on that, I don't know.
What will happen at the most he will have to pay a fine meanwhile he made millions.
If you recall, Stephen Friedman testified at a congressional hearing on the bail-out of insurer AIG. When questioned on this issue (i.e. buying GS shares while President of the NY Fed, he genuinely appeared as though he could not understand why anyone was raising a fuss about this. I remember thinking at the time that the sense of entitlement in this guy was such that he could not possibly comprehend why anyone would think there was a conflict.
Does anyone else recall this? I will try to find the clip on youtube...
He was being questioned by Mary Kaptur I think of Ohio. I remember seeing a bit of it.
Why is congress asking the questions? it should be the FBI
I think we know the answer: I did'nt know nuttin.
Martha got prison for a minor trangression. Mr Friedman has ridden roughshod over SEC laws, as one who cannot claim the "innocents" defence, shouldn't he get the book thrown at him. Why has it taken so long?
Long standing Fed policies on COI are null and void under the new emergency powers act to save the world economy. The Fed doesn't actually break the law anyway. Those pesky laws are intended only for common folk.
The Fed operates in a world of unaccountable obscurity . Easily bendable policies exist only to serve various Bankster purposes....especially self-enrichment.
Inquiries from CongressCritters are considered a mere nuisance.
So
Miles Kendig, a man of few words. :>)
"Congress is pretending to be investigating yet more criminality out of Goldman..."
The Book: "How to Raise Campaign Bribes Without Really Trying"
by Barney Frank and Charles "Schmucky" Schumer
1. Make disingenuous populace statements against "fund" (read bribe) raising target.
2. If bribe offer is too low from target, announce investigations...
3. Load up bribe sack, do the bribers bidding while announcing populace action...
4. Repeat every 2 years... no scratch that.... wash, rinse, repeat constantly during your entire career...
Sounds like a lot of work. Why not just stick the saline solution IV (aka liquidity or campaign cash/bribe) directly into the nearest vein?
LOL, CD.
"Why not just stick the saline solution IV (aka liquidity or campaign cash/bribe) directly into the nearest vein?"
That is for the regular season just like the NBA. It is an election year now... playoff time. Time to get serious competing for those campaign bribes.
Check out Friedman starting at 37:25...
http://www.youtube.com/watch?v=aRQkk76-mJk
That was pretty good seeing him try to squirm his way out of the questioning to no avail. Obvious he was capitalizing on his position in GS shares.
No, no, no! You misunderstood!
He said they were "ring-fenced" and that Fed staff and officials were really meticulous in isolating him from the decisions so that there would be no conflict ...
Now move along...
Wow.....and I thought Thailand was corrupt. Nothing but amateurs here.
..while the waiver was in process (to grandfather his original 46K shares) he says every law was in abeyance. So why did he only buy 37K new shares which had NOTHING TO DO with the waiver for pre-existing shares. This is transparently absurd reasoning. It's like getting a waiver for a drugs in your system before you took the job, and while waiting go on a binge saying that there is no longer any issue until the resolution! This man remains free? This is as bogus as Banks letting non-mortgage payers stay in their houses for years so they are not obliged to record the foreclosure. Not so surprisingly these properties will be the ones with HELOCs that will be written down to Zero which would cascade the remainder on that bank's books by now needing to mark the HELOCs. Banks burned Debit overdrafts by allowing the number of overdrafts by arranging the largest to hit first to maximize PERFECTLY the number of $35 overdraft fees. So please audit and expose the Fed rather than allow this private cabal to pretend they are doing anything but enabling the member banks to rape the public.
Congress Demands?
The theater of the absurd. A gaggle of narcissists full of shit, sound and fury, signifying less than nothing.
The cunts in congress would do better if they didn't begin every round of questioning by giving Bernanke a blowjob.
Why, you ask???
Could it be because Friedman is also a member of several presidential intelligence boards (last time I checked)?
Could it be because Friedman is also on the board of In-Q-Tel?
Could it be because Friedman is also with the Center for a New American Security?
Could it also be all those American intelligence panels Friedman has sat upon?
Could it possibly have anything to do with the Financial-Intelligence Complex which has ruled America since WWII?
(Yeah, I know, it's that conspiracy stuff again. Those economic elites don't really exist.....)
Anyone happen to read the recent corp-financed disinformation book by Eamon Javers titled, Broker, Trader, Lawyer, Spy??
On the bottom of page 191, continuing on to the top of page 192, there is mention of the number four or five guy at the D.O.D. being on loan to Goldman Sachs (this was around 2005 or thereabouts).
Number five guy at DOD on loan to Goldman???? Oh yeah, there's no such thing as the Financial-Intelligence Complex.....
Friday Pop Quiz Second Clue
15 senators, 33 congressmen, and 17 presidential advisors
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