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Edolphus Towns Says Fed Officials Were Unhappy About Friedman Waiver To Buy GS Stock, Were Overruled
One of the most botched cases of conflict of interest abuse by a Federal Reserve official will forever remain the purchase of Goldman Sachs shares by Goldman Board Member, and FRBNY Board Member (the squid likes to keep its Federal Reserve puppets closely supervised) Stephen Friedman: an act strictly forbidden by the Fed itself. The action was so indefensible it led to Friedman's quitting shortly after disclosure of his transgression leaked. Yet the reasons why Friedman managed to effect this purchase of 37,000 shares of GS on December 17, 2008 is because he was granted a "waiver" by the Fed. A month ago, Chairman of the House Oversight Committee, Edolphus Towns sent a rather angry letter demanding an explanation from Ben Bernanke why he had allowed this blatant case of semi-insider trading to occur at the highest echelons of shadow government. Today, we find out that Towns is unhappy with the production provided by the Fed, and concludes "that senior officials had misgivings about granting the waiver but were ultimately overruled" and that "we believe a closer examination of this issue is necessary, especially when Congress is considering increasing the Fed’s powers. In the coming weeks, we will continue our investigation of this matter and will schedule a hearing to learn more from Mr. Friedman and senior Fed officials about how he was permitted to make windfall profits by trading stock in a company he had a role in regulating." We are not so sure there is any room for confusion - after Goldman told its pseudo employees at the Fed to bail it out at the cost of tens of billions in taxpayer money, why is it in any way surprising that those same FRBNY Goldmanites will not be allowed to profit from Goldman's bailout as well? The is nothing than a clear cut case of power and political capture at the very highest level of the country, by the two most collusive entities, whose sole purpose is the confiscation of middle-class wealth, or whatever is left of it, before the administration decides to hike middle-class taxes to a Socialist country appropriate 99%.
From Towns' original letter:
Notably, under a long-standing policy ofthe Board of Governors ofthe Federal Reserve System (Federal Reserve), Mr. Friedman was prohibited from owning shares of any company under the supervision ofthe Federal Reserve. Despite the clear prohibition and apparent conflict of interest, Mr. Friedman requested a waiver1 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 ofthe Fed's operations. [ha ha ha]
Here is Town's just released update in its entirety:
Towns, Lynch Statement on Review of Federal Reserve Documents
Questions remain surrounding decision to grant Friedman waiver
WASHINGTON – Chairman Edolphus “Ed” Towns (D-NY) and Congressman Stephen F. Lynch (D-MA), Chairman of the Subcommittee on the Federal Workforce, Postal Service and the District of Columbia, today released the following joint statement after completing a review of internal Federal Reserve documents related to the Fed’s decision to waive its conflict of interest policy in January 2009 and allow Stephen Friedman to simultaneously own Goldman stock and serve as Chairman of the Board of the Federal Reserve Bank of New York. When the waiver was granted, Mr. Friedman was also on the Board of Directors of Goldman Sachs, a company that was under the supervision of the Fed.
“Two years after the collapse of our nation’s financial system, the Committee continues to examine decisions that were made by the Federal Reserve Board and the Federal Reserve Bank of New York during the height of the crisis in an effort to answer lingering questions concerning that time period. We also believe a critical analysis of these events will improve the provisions included in the financial regulatory reform bill that is moving through Congress.
“A review of recently acquired internal Fed emails surrounding the decision to grant Stephen Friedman, a member of the Board of Directors of Goldman Sachs and former Chairman of the Board of Directors of the Federal Reserve Bank of New York, a waiver in January 2009 that permitted him to serve on the New York Fed despite his ownership of Goldman stock reveals that senior officials had misgivings about granting the waiver but were ultimately overruled. Mr. Friedman’s purchase of Goldman stock a month after the New York Fed directed AIG to pay its counterparties, including Goldman, at par, and three months before AIG’s $13 billion payment to Goldman was officially announced to the public also raises conflict of interest questions.
“We believe a closer examination of this issue is necessary, especially when Congress is considering increasing the Fed’s powers. In the coming weeks, we will continue our investigation of this matter and will schedule a hearing to learn more from Mr. Friedman and senior Fed officials about how he was permitted to make windfall profits by trading stock in a company he had a role in regulating.”
And even as Congress, which is just as captured by the ruling banking party pretends to slap wrists left and right, Goldman continues to make tens (or hundreds, thousands, pick the word) of billions in "profits" which is nothing else than money stolen from the future of America's workers in the form of ZIRP and a diagonal yield curve. But for our own sake, this scheme is so unbelievably complex, we must all relinquish any attempts at rational thought, and let those who blew up the system make sure they manage to steal just enough before the next and final collapse occurs. Until then, we expect many more letters and many more veiled threats of TBD forceful action over the next century.
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Oh, hell yeah, let's examine it! What's taking so long? Redirect/misdirect.
Darth Blankfein piece of work.
His sabre is short and weak.
senior officials had misgivings about granting the waiver but were ultimately overruled
'Uh.. overruled by whom?'
Super-duper-senior officials?
'On whose authority
I have none over me
On whose authority
There's none that I can see
On whose authority
I have none over me
On whose authority
No one speaks to me'
-Nada Surf
+ a million.
'Uh.. overruled by whom?', that is the question. wonder if the honorable mr. towns is willing to discover the answer. if so, there might be a plane ride to cleveland on air force 1 in his future.
It's amazing that no one asked the question.
there were no higher officials. This is just the same as saying:
"We are they, but we are not going to tell you we are they."
So that is why you wind up with Congresscritters like Hank Johnson (Guam's heavy tipper), because knowing you are them and talking all the time to yourself and being unable to talk to anyone else about them cause you are them rots your brain.
+1 gazillion,
Who overruled the fed officials? Who has authority to overrule the fed? Or are the "fed officials" just trying to cover their asses in retrospect?
"Who has authority to overrule the fed?"
The All Seeing Eye?
No no no no no!
It says right in the letter, that the misgivings were overruled by the (Fed's) "Board of Governors".
That means the same people who oversee the FRBNY's activities (meaning the conditions of capital markets and formally approved the transfer of counterparty funds to AIG from whom Goldman, doing GOD's work, made bundles) the decisions of which were made by the committee that Bennie the Red, his little old lonely self, chairs. The "Board of Governors" of the Federal Reserve System.
None Other But.
Remember, this is the same Bennie the Red who along with his same Board of Governors formally approved the acceptance of Maiden Lane I and II assets, essentially committing the Fed to the expenditure of monies (fiscal policy) under their charter for which they have no authority, some folks believe.
The same Board of Governors who under Uncle Allan the Maestro and the Clinton Administration ex-post facto, via Graham Leach Bliley (Ex Post Facto) approved the extinguishment of Glass Stegal so Citigroup could assume Salomon Smith Barney, never mind that they'd been bailed out by the Fed/Treasury numerous times prior thereto.
Whaddya mean "WHO?" The same robber barons and their regulatory capture pals that's been a rapin' and a pillagin' the Amerikan public all along.
That's fucking WHO!
At the heighth of confusion and distraction, the best time to commit your crimes!
Audit the FED=End the FED!
It doesn't matter anymore. Bernanke is already conducting fiscal policy by virtue of his all in Zimbabwe moves, as the gov has no choice but to increase taxes to compensate for the consumption gap and debt monetization, or face a funding crisis.
The message is clear: spend money you don't have, thus enslaving yourself to the NY cartel, or pay more taxes into the collapsing ponzi known as the US treasury full of smoke, mirrors, and off balance sheet liabilities.
Once again we have clear, unambiguous evidence of criminal behaviour complete with documented names, dates, and actions. All on the public record available to regulatory agencies, prosecutors, legislators, and the press. So far it has produced a "rather angry letter" and suggestions that "closer examination of this issue is necessary." I am eagerly awaiting public trials and prison sentences, followed by mass resignations of public officials who knowingly aided and abetted such blatantly illegal behavior.
And so the pattern continues...until it doesn't.This kind of behavior is currently allowed by the people of the US.But once the people start to say no to it in a forceful way, this current crop of goons will regret what they have done...and that is an understatement.
It would be better if it was dealt with now, but apparently they want angry mobs to mete out justice.How else can you explain such totally self absorbed criminal idiocy?
my guess is that they believe they are the masters of the universe (financial).
much like W thought he was master of the universe (physical).
It was actually pretty simple. Using compound interest, infinite credit expansion, and unlimited taxation capacity as an intellectual framework, the financial industry, corporate insiders, crooked lobbyists and corrupt politicians and regulators were able to steal America's wealth from "the future." That's what is so diabolical about it all. They stole not only all PRESENT wealth, but also all the wealth to be created in the future.
FR BANANA: http://williambanzai7.blogspot.com/2010/04/federal-reserve-banana.html
I really want to know on what basis they were overruled. I believe Martha Stewart is owed an explanation as well.
I'm against the "redistibutive change" transformation the current regime is running. However, in the case of Golden Slacks, everything post TARP to present should be siezed and redistributed. This will put to ease all the "end of TBTF" bullshit talk we've gotten so far, as Golden Slacks will be only a memory and a lesson.
on Sat, 04/10/2010 - 12:00
#294659
I'm against the "redistibutive change" transformation the current regime is running. However, in the case of Golden Slacks, everything post TARP to present should be siezed and redistributed. This will put to ease all the "end of TBTF" bullshit talk we've gotten so far, as Golden Slacks will be only a memory and a lesson.
digalert,
Not only GS any TBTF... chopped up and sold off in little pieces... the auction would pay for any outstanding debt to be sure... 2 birds with one stone, lesson learned by all... make the Bond holder and share holders whole and there really is no arguement to be made... except by the lobby, the rumor mill before it gets thru Congress and the House... which would cause a run... as well the algo's that keep the market PLUS, PLUS! PLUS!! would stop running... it would be a blood bath. But to be clear I am for opening the floor to a practical way of cutting the multiple heads of the sankes off for the betterment of all... fuck GS, JP and likes yeild curve... 0% rates to buy the world with while the middle gets squeezed for thier stealing, again.
Be well, JW
First Jim Grant reminds us that debasement of the currency is a capital offense.....Ben!
Now a conflict of interest in direct violation of the law was approved at the highest levels of the Fed.....Ben!
Bernanke should hope for quick ejudication of both of these because when the masses rise up and frontier justice becomes the order of the day, his exit from power likely will not be as pleasant as it would be now under the current regime.
Because, of course, federal politicians and DC bureaucrats are prohibited from owning stock in the specific companies that they regulate/promote.
Right?
Right???
Has anybody ever heard of "Serious Materials"? Cathy Zoi? Robin Roy?
http://stossel.blogs.foxbusiness.com/2010/01/14/a-little-company-praised-by-president-obama/
"My name is Barack Obama, and I approve of this company! (Since they are old friends from Chicago and major contributors to my campaign)"
COMPLETE AND UTTER LAWLESSNESS ON ALL LEVELS
....thanks Rusty. That one's a classic reminder of how radically things have "changed" in the new ObamaNation.
rusty nails get serious grease
Maybe we will someday find out who the " OVERRULER " was in this matter. But I wouldn't bet on it.
Just give em all your fuckin money, get it over with already.
Unfortunately, it is defeatism that is killing this country - the idea that there is nothing that can or will be done about the injustices perpetrated on the American people. Gives new meaning to the word "Uncle" in Uncle Sam.
You sound like Jimmy carter blaming the peeps for "malaise". The country isn't being killed by a defeatist attitude, it's been murdered by a handful of corrupt sociopaths. And BTW, don't forget that freedom is just another word for "nothing left to lose". I don't know what the tipping point is but it will require a goodly portion of the US citizenry to lose it all before anything changes. Sadly, I look forward to that day.
And again, I find your comment an utter shit-for-brains response, blame this mess on collective defeatism? Fuck you.
Good description of the word "freedom". The average American actually knows NOTHING of "freedom" as you put it, as they have much to lose (at least in their own minds):
- Cable TV and the shit that graces all 500 chanels
- McMansion
- McCar
- McCredit Card
- McStatus
Most of us are slaves not to the state, but our own narcissistic habits, behaviours, and attachments. Only when we divest ourselves of the need for anything aside from food, water, shelter, do we know what true "freedom" is. Well said.
freedom from desire. Establish a higher desire.
Most wont until they suffer.
Correct you are. "Desire" and "attachment", two words that are fully interchangeable.
I hope you are well merehuman, good to hear from you.
JohnKing - You don't even know me or what I believe in a but you have the audacity to use such language and spew such venom over a simple statement of opinion. Such is the power of anonymity on the internet I guess. So why aren't you out there doing something about the corrupt sociopaths and demanding they be brought to justice - that is my point. Oh, excuse me, you are just a helpless victim. Exactly the problem with this country today. Oh, and by the way, Jimmy Carter certainly had his issues, but had people listened to him way back when and reduced our dependence on foreign oil maybe we wouldn't be paying close to $90 a barrel for oil and fighting senseless wars to preserve our access to it.
You and your victimhood is what is wrong with America today. If you're angry, do something about it instead of whining.
And please - spare me the Bobby McGee quote. Or if you're going to use it, at least attribute it to it's rightful author. Let me know if you need help with that.
Yes, when your daughter gets raped blame her for not fighting back hard enough and engaging in defeatism, or maybe you should take the blame yourself for your apathetic attitude towards security, how woefully ignorant of you to think that a citizen should be safe in his/her environs.
I consider those who blame the victim to be a little lower than the perps on the sleaze scale. Who are you fronting for? It would be mass euphoria for the corrupt political/financial class if they could lay off the past and ongoing criminal enterprise on the victims. Are you working in the viral marketing dept. for some slimy organization or are you just a total fucking idiot? You, my dear flake are trying to end-run the logical progression of justice (crime and PUNISHMENT). You blame the victim, case closed, no justice. Is this the meme you are hoping to spread? Let the rapist off the hook?
As I said, give em all your money, get it over with, by hanging onto a shred of hope that the green shoots are on the way, that the assholes from the hallowed "institutions" made "mistakes", that another Congressional theatrical show/hearing is going to fix something is asinine. Justice delayed is not justice denied, this will work itself out in time and assholes like you who blame the victim will hopefully be sharing a cell with the perps who think they got away with something.
Fuck you.
http://www.youtube.com/watch?v=5FMhnl0__Vo
If my daughter were to ever get raped, I would do all in my power to make sure that the prerpetrator never saw the light of day again. I would not sit back and whine that there was nothing I could do about it. You refuse to see my point either through sheer stupidity or blind anger. I am done responding to your idiotic posts. You are the most dense person I have ever come across.
But I still want to know - what action are you taking to prevent them from taking all the remainder of what little money you have left (you did say you had nothing left to lose). Are you doing anything concrete to see that these financial criminals are being brought to justice, or are you just a paranoid victim - defeated before you even try to fight back? Here's a non-violent idea - identify a criminal financier or institution you'd like to go after, do some research on some great criminal attorneys and find out how much it would cost to hire one, start a web campaign to raise enough money to bring a case against your chosen criminal and see that they are prosecuted. You might just succeed in doing something about the problem instead of being victimized by it. Perhaps you might even set an example for others.
Thank you.
Yes, I'll start the JohnKing Justice Dept. Look out peeps, there's a new sheriff in town!
The verbal abuse is over the top and unneccessary to your argument.
Fuck you too. :)
Seriously. If you blame the victim for their condition, you will at the very least get a hearty FUCK YOU from me.
Have a nice day.
Seems like you just want to tell everybody that doesn't agree with you "fuck you". BTW I didn't say anything about agreeing or disagreeing with you. Good response. You are looking for people to disagree with you, so you can take out your frustrations on them. You have a mental disability.
It does seem that you pretty much want to argue with everybody. Lighten up.
While Janis Joplin does a wonderful version of that song, she is NOT the author. You need to attribute that honor to Kris Kristopherson.
I suppose the contigent tasked with spreading the psychopatic meme of "blame the victim" will be offended by anything I write. So in the interest of spreading the anti-psychopathic meme:
Fuck you too.
Sounds good in theory, but it wouldn't be satisfactory with them. They get more enjoyment by stealthly taking it from you, thinking that you don't really know it. If you just handed it to them they would look at you oddly and feel humiliated at the thought that you might actually recognize what's going on.
The current Mythology is that anyone who tries to do anything about it will collapse the global economy.
This is supposed to keep future administrations from investigating an prosecuting.
Corruption is always easier if you have moral justification.
A remedy for financial fraud:
How would does BigOil handle madness out-of-control matters in the real world? They use principle of Force Majeure..."Superior power" as escape clause in all contracts.
1. GoldmanSachs admits doing God'sWork.
2. Congress or Treasury can declare ForceMajeure and cancel validity of any GS financial dealings.
3. Financial abuse can be erased, debt-slavery reversed, and clawbacks begun.
4. The fact of declaring a ForceMajure in financial dealings establishes precedent. for the future.
Well, this certainly wouldn't be the first time that articles of impeachment against the Federal Reserve were introduced in Congress.
http://www.citizensforgovernmentaccountability.org/?p=1260
Nothing is going to come of this. There is no law for powerful people. I wish I didn't have this feeling. I don't revel in pessimism, but I know this exact feeling from the last administration as well.
You think, okay here is clear evidence of (blank), surely someone will pay for this. Surely someone will lose their scalp. Even a lower level person.
Here is overwhelming evidence that the administration told all kinds of lies and half-truths to get us into a foolhardy and costly ware. Surely someone would be brought on the carpet for that right? No. Here's clear evidence that we're torturing people. Surely there is some price to pay by SOMEONE for this behavior. No. Well, here is clear evidence that someone was using the Justice Dept to go after political enemies, and when prosecutors didn't want to do it, they were fired. Surely, someone will pay some kind of price for these shenanagins, right? No.
Here is evidence that unprecedented sums of money have been and continue to be shoveled to the richest and most powerful people in the country via the banks. Surely this can't go on forever right? Some righteous and good public servant will pull back the curtain and daylight will kill these monsters and we'll be vindicated right? What do you think?
Again, I don't revel in defeatism, it makes me feel sick. But nothing will happen to these people. They will keep the money. They will live like kings. Joe shmoe will not win out in the end. There will not be any justice.
That's why the system will ultimately come apart. We don't even know it, but nature has programmed us to only take so much shit until.........
pop!
This is a blatant example of high level corruption at the Fed. It has gone unpunished but as the French aristocracy learned the hard way things can change rather abruptly.
Even if he had a waiver, it may still be insider trading if he possessed non public information.
The problem with an out of control, 'pop' revolution is that the most culpable will escape. The distribution of justice will not be equitable and it will not be just. The average citizen will pay more for it than Mr. Friedman. Yes, the seemingly upper middle class will get clobbered, but the truly rich elite will escape relatively unharmed. An out of control all out orgy of violence will serve the super elite well in that they will again bring in their white knight saviour puppet.
wholeheartedly agreed and all the more reason to help make sure that any pops that happen near you don't explode into orgies of violence. controlled demolitions need not have to be only a plaything for TPTB.
Escape? Maybe on a G650? In their dreams!
Got SA7's? $160K per copy at your local Eastern European arms bazaar. Volume discounts. Attractive financing terms courtesy of Bank of Odessa. One day hands-on training course supplied free of charge. The first 50 callers receive a free Dragunov SVD with a PSO-1 Scope.
I want to know how much Friedman slipped Ben to get the waiver
Those who put themselves above the law often in the end find they have to face the people instead, aka Caucescue. GS and the Fed may need their own private army to stay safe if this economy disappears down the plug hole.
Bravo to Towns and Lynch for pursuing this. Keep the faith, they may make some progress with hearings. The FED and GS are faced with an interesting dillema, throw Friedman to the wolves or protect this blatant criminality. Throwing Friedman to the wolves may not be a choice since he knows a lot and is proud. He no doubt thinks he was entitled to this and got a waiver. Towns and Lynch should make as much noise about this as they can. We should send a link to this article to all the financial reporters we know. If we can make this story BIG it is a real crack in the dam for these guys. Grab the pitchforks........