On The New York Fed's Editorial Influence Over The WSJ

Tyler Durden's picture

One of last year's key pieces of financial reporting was Jon Hilsenrath's disclosure that then-Goldman Sachs and FRBNY director Stephen Friedman was in possession of Goldman Sachs shares while holding inside information that the Fed was willing to bailout Goldman et al forever and ever, even as a waiver to allow Friedman to buy was still in process with no formal outcome, and the Goldman/FRBNY director was loading up on even more shares. As the WSJ's Hilsenrath and Kate Kelly reported, "while it was weighing the request, Mr. Friedman bought 37,300 more
Goldman shares in December. They’ve since risen $1.7 million in value." Not a shabby profit for someone who knew the system would never put him at risk of having to disgorge ill-obtained profits while in a position so conflicted, even a Chrysler-addled supreme court justice would have no problem figuring out just how blatant the systemic abuse was. Sure enough, the reporting was of sufficiently high caliber that it garnered a finalist place in this year's Gerald Loeb Awards (and seeing how ARS' "Too Big To Fail" chronology-of-events-from-the-perspective-of-Wall Street won a Loeb, it tells all you all you need to know about this particular award, and we'll leave it at that). Yet going through some of the recently made public e-mails produced on behalf of Stephen Friedman, we had a few questions as to the full independence of the WSJ when it comes to "editorial" suggestions from the Federal Reserve Board Of New York. As the below email from Fed EVP of the Communications Group, ala media liaison, Calvin Mitchell to the WSJ's Kate Kelly demonstrates, and as the final product confirms, the Fed was quite instrumental in what quotes, tangents, implications, and story lines the WSJ was allowed and not allowed to use and pursue in framing the problem of not only Friedman's conflict of interest, but that of the FRBNY board of directors itself. And seeing how Kelly and Hilsenrath caved in to every FRBNY editorial demand, one wonders just what the (s)quid-pro-quo for this particular form of alleged media capture may have been.

We present FRBNY-TOWNS-R1-191200/1:

We may be a little too far removed from the traditional way media is editorialized, but last time we checked we had the impression that the "independent" media would not follow the guidelines of the Federal Reserve on what is and isn't publishable, especially in the context of a piece that could easily end up having very damning implications for Goldman, the FRBNY, a "respected" director of both entities, and the entire regulatory process that allows these kinds of conflict of interest to be waived retroactively with an ex-post facto waiver, such as the case was here.

Since Zero Hedge has little risk of ever being in the FRBNY's good graces (ha ha ha), we would like to present the very quotes that the FRBNY thought may have been a little too sensitive for public consumption.

To wit:

  • On the general attitude of the NY Fed Board:

"In fact the ultimate approval for the things that get done, basically, get done by the full Fed board in Washington and our board has what I've called a blanket recusal. We might get briefed that something... problematical is happening this weekend... but we not only don't get involved in that stuff, we don't want to ratify it and we don't want to get involved in it because we don't want to have a perceived responsibility that exceeds our authority." I'D SUGGEST NOT

  • On [Friedman's] involvement/awareness of what the NY Fed was doing with AIG from last September on:

"The audit committee... focuses on how the Fed staff has geared up to handle its responsibilities, and this is something they take very seriously and report on to the full board, and I have on occasion audited the sessions... That's administrative or ministerial as opposed to matter of policy." I'D SUGGEST NOT.

  • On [Friedman's] feelings about the candidate to succeed Geithner and the fact that he didn't want the person's past job(s) to be a distraction:

"We were very sensitive to what organization that person had come from." I'D SUGGEST NOT

[Geithner's replacement, Bill Dudley, came over from Goldman Sachs, and was previously in charge of the Fed's notorious "Liberty 33" Markets Group, better known in other circles by various less politically correct acronyms]

It is easy to see why the Fed was staunchly against any of these "insinuations" making the final Hilsenrath/Kelly article. Yet we would like to pick up on Ms. Kelly's line of questioning, and push this formerly confidential email out to the public, to make it clear just what are the questions that the Fed would prefer to not see discussed in a broader public arena. We do also wonder, just why it is that the WSJ journalists dropped pursuing these lines of investigation upon the merest frown of disapproval by a lowly Fed clerical worker. Just how much power over "established and independent" media does the WSJ have? Also, just how much information is the Fed feeding to publications that are in its "white list" in exchange for perpetuating a cordial relationship where the media side of the equation never discusses more than is politically acceptable (also makes the Loeb committee award to Mr. Sorkin that much more understandable).

To be fair, it appears Hilsenrath did manage to get on the Fed's nerves at least once prior to the abovementioned smackdown.

This can be seen in the following email from Mitchell to FRBNY General Counsel Thomas Baxter (FRBNY-TOWNS-R1-101195):


Because heaven forbid someone should "impugn the integrity of Friedman or the Fed because of the so-called Goldman connection." We wonder just what high level talking-to resulted as a consequence of this almost-published scandal. Key word here being:almost. While absent additional email disclosure from Mr. Friedman, and his public production seems surprisingly sparse, we would be the last to challenge the WSJ reporters' professional integrity to pursue a story to its core, this kind of ultra-high level intermediation by none other than the Federal Reserve does bring up some rather uncomfortable questions.

PS. for those wishing to do some additional due diligence, we suggest a brief perusal of Bates 195712

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King_of_simpletons's picture

Why go to NYFED when Rupert Murdoch owns WSJ.....WSJ is filled with propaganda these days...

Buzz Fuzzel's picture

I'm wondering how many of the mental midgets who use the term "Faux News" have ever watched more than 30 seconds worth of Fox News. 

Fox is more likely to pickup this story than any other so called news reporters.

pan-the-ist's picture

Guess again.  Not if it casts news corps 'WSJ' in a bad light.

Anarchist's picture

Mental midgets? Anyone who thinks Faux News is anything but the personal mouthpiece of Rupert Murdoch and his Kleptocratic cohorts is beyond stupid. The same for anyone who believes the corporate media in the US always acts in the best interest of the American public. You probably believe we are in Iraq and Afgahnistan to spread Democracy. That kind of stupid cannot be fixed.


Muir's picture

"Fox is more likely to pickup this story than any other so called news reporters."




More likely (in order of likelihood)

1. Comedy Central

2. Bloomberg

3. PBS


drwells's picture

Or Rolling Stone or the NY Post.

jeff montanye's picture

this, and homer below, remind me of the harvard study of the use of the word "torture" to describe  waterboarding as reported at the nyt and the washpo ("liberal" according to the benighted sector of the right).  for decades the practice was "torture" (when other nations did it).  as soon as the bush administration said we're doing it and it's not torture, the language changed to "harsh interrogation practices used since 9-11" or some such newspeak.  partisan politics is used to confuse and divide.

Miles Kendig's picture

Jeff - It's just a dunk in the water according to deficits don't matter Dick Cheney and the aforementioned "news" organizations.. Most especially the Wall Street Urinal.

UncleFurker's picture

>Fox is more likely to pickup this story than any other so called news reporters.


Of course it is, dear. And I have a 14 inch cock.


homersimpson's picture

Why is it you libbies call Fox News "Faux News" when all CNN/NBC/MTV/Comedy Central/(insert leftist news station here) does is just have a bunch of libbie blowhards constantly discuss news from a leftist point of view?


Muir's picture


If it feels comfortable, let it fall where it may.

CD's picture

Please feel free to come up with derogatory/playful monikers for these as well. MSNBS/NBS/CNBS seems to be the term of choice for the peacock-logoed broadcasting phenomena here on ZH.

I think the broader point is that ALL mainstream outlets, be they left/right/"independent" are hopelessly beholden to and captured by the very entities/interests they are supposed to report on - at least to a certain extent. There are (generally individual journalist) exceptions, and there are degrees of capture (perhaps?), but the spin is ever-present. Fox is perhaps more obviously agenda-centric, but that may be a personal taste coupled with lack of exposure -- I only watch a few clips online here and there, my TV is strictly for DVD/VHS.

Howard_Beale's picture

Frankly, I enjoy the BBC, CD. And they are more likely than anyone to pick up this story, but who cares?

This is not directed at you CD--this is for you newbies. Stop infighting like a bunch of kindergardeners with the lefty/righty/junking nonsense. Don't you get it? That's the illusion, the plan, the way to keep you under control. Once you accept that there is no left or right--only control--you will truly get off the FC porch.

You are captured if you are wasting your brain cells thinking about who will pick up the story, etc. Use what is left of your captured brain to think deeply about what is happening and the context of the post. If you don't, then TPTB have you right where they want you so you won't see the bigger picture. Divide and conquer. Perhaps Cognitive Dissonance will address this issue.


The story is what is important here. This is outfuckingstanding journalism.

grunion's picture

A little too sanctimonious for a positive rating.

UGrev's picture

Well, shit. If I had known Comedy Central was THEEE place to get my daily data in the form of comedy over information... daaaaaaamn.. thanks guys!!  /end sarcasm




jeff montanye's picture

i junked you by accident trying to click on your link.  sorry.

The Rock's picture

If you click it again he will be "un-junked"

suckapump's picture

No offense, but I was amused by the fact that someone junked your how-to-un-junk post. It's almost like getting a gold medallion with a picture of you with a gold medallion.

Red Neck Repugnicant's picture

On the topic of Fox News, please give my opinion the respect and authority that it deserves. Fox News is like a bad-ass Camaro with flames stenciled on the side - you can't fuck with that sort of power. It cuts through, clarifies, takes no shit and separates the men from boys, like a Z28 ripping up the track.  Damn, I've got goose bumps just talking about that shit.  

The only news I watch is Fox News.  I'm a Christian conservative red neck, who doesn't want his news filtered through the liberal, homosexual, socialist agendas that one finds on NBC, CNN, and NPR.  If Fox News is a Camaro, those other stations are nothing but bitch-ass tricks, driving Civics with rainbow stickers on the back. 

I've been listening to the giants like Glenn Beck and Sean Hannity for the past two years, which in turn, has opened my eyes to the corruption that runs rampant throughout the Democratic party.  Graph after graph after graph on Beck's chalk-board has proven that Obama is a pagan, racist terrorist, who panders to the illegals and homosexuals (the only ones dumb enough to vote for him).  Obama has a socialist, grand plan to transform this country into a Mars-like colony where everyone is a homosexual, everyone is named Jose and everyone has insurance.  Try changing my name to Jose when you've got a shotgun pointed at your face, bitch!  

Obviously, I'm probably one of the smartest and most cultured (I wear Brut after-shave) posters on this forum, and I exclusively rely on Fox News for my opinions.  I don't know much about economics or that faggot named Keynes, but I know a lot about God, guns and various groups of people who aren't welcome in my backyard.  

That being said, Fox News fits my agenda.  

And another thing, if this country had a Republican in the White House, we'd never be in this mess.

Palin/Jesus 2012


Jim_Rockford's picture

If you people would spend half the time digging through the treasure trove of documents that Tyler hath provided linked goodness to instead of hurling insults at each other, we might all come together and teach the world to sing.  Now git to work dammit! 

  >>>CLICK HERE<<<

CD's picture

Far be it from me to shirk homework, but the structure is laid out by member names, and the gentlemen mentioned in the quoted emails are NOT in their respective folders. Could you mention keywords/names?

CD's picture

This was way over my head to start with, but R1-21553 (contained in folder for Sarah D.) is a printed version of a spreadsheet that seems to list a lot of AIG deals (CDS, TRS, 2a7) by counterparty, with the following details:


Position Number, Deal Name, Counterparty, Currency, Type, MS/Arb/RegCap/Other, Collateral Type, Current Balance, Date of call, Counterparty Call Amount (redacted in all but a few cases), Sept 20 AIG marks, Blackrock stress price (or average), Dollar loss with additional above points, Loss on termination, Incremental exposure if AIG is downgraded to BBB+, ATE Below X rating, Rating based ATE, .

Whoever archived it did not have a lot of experience with printing Excel, did not have time or possibly did not mind creating a jigsaw puzzle for whoever was looking at it.



Jim_Rockford's picture

I was looking through some emails and buried in one, there are tables of  the Maiden Lane III Purchase Price Schedule that take up 16 pages or so.  There are approximately 40 distinct CUSIP numbers on each page.  So out of the 500 or so CUSIP numbers, why is 4371 ODAD4 the only one that has it's associated data redacted?

Also, an interesting email exchange in which the french dude from SocGen is willing to hop on a plane and fly to NY on the weekend in order to sign.  Gee ya think?

Lots of wading but you can find that stuff here: http://documents.republicans.oversight.house.gov/SIGTARP-production/

then third sub directory: FRBNY production to S+

then :  emails and attachments part 2 of 5.pdf 

page 138 for the schedules

page 88 for the French connection

lizzy36's picture

There might be a reason tyler told you to LOOK at those specfic emails. 

See what is contained therein.

Jim_Rockford's picture

Tyler tells me to do stuff but I ignore him.  I'm too busy listening to my neighbors' labrador retreiver.

CD's picture

[sigh] I cannot bring myself to take advantage of the opportunity presented here, but whoever does, RECORD IT plz.


Jim_Rockford's picture

Hilarious.  A Brooksley Born soundboard should drive Viniar batshit crazy.  You were right, the other number was for Turbo, not Friedman (bad doggy).  I wish I had all the numbers in Turbo's phone logs.  Could sell them to a DC Madam and retire in style (no offense to you Spitzer).

Jim_Rockford's picture

LOL ... TD you won't believe this but my neighbors' labrador retriever just whispered Vinier's home ph number in my ear.  Then the son of a bitch gave me Friedmans number too!

- High Five

CD's picture

Are you sure it wasn't Timmay's? BTW, you may want to keep hanging out with that retriever, it may have friends around the block who know... friends of the above fine gents.

Cheeky Bastard's picture

Check your e-mails from Jul 3. 

velobabe's picture

I fought with my twin, that enemy within
’Til both of us fell by the way
Horseplay and disease is killing me by degrees
While the law looks the other way

b. dylan - II

this stays, maybe can help someone else be spared.

lizzy36's picture

Well Palin/Jesus have my vote. 

IF and ONLY if Jesus shows to debate biden.  Then i am on board.

Jim_Rockford's picture

btw, aren't you Canadian eh?

Miles Kendig's picture

and you work in southern Cal and live in a mobile estate..  right?  At least there can be no question as to where you garner your dollars...


Miles Kendig's picture

Still slopping the gerber eh homer?  The logo doesn't matter when the goal is disinformation and fracturing society to keep the heard moving as the oligarchs want.  Try a different flavor since you seem to be full of the "it's all THEIR fault" crap.  WE ALL are the society you deride since the copy at WSJ, NYT, FOX, CNN & CNBC is all written by the same folks who write for MTV's The Hills... and your favorite networks biggest cash cow.


Cognitive Dissonance's picture


Happy belated Zero Hedge one year anniversary. According to the ZH Gods, you are one ZH year old.

Happy birthday Miles.

brushfire's picture

this is fantasic journalism. thank you ZH.

pan-the-ist's picture

Indeed.  A TD original and a fine example of why everyone here stays tuned.

zaknick's picture



ZH is THE site I get my biz/life info from; used to read FT and even the Alphaville team are drunk on that kool-aid.

Scooby Dooby Doo's picture

Oh I don't know.... One day you're calling out the WSJ's connection to the Fed but on a previous day you try to convince the readership that Santelli is a superhero who has CNBC backed into a corner and has free will, "you can trust this guy. CNBC is good".

How about digging into CNBC's relationship to the Fed and how Immelt is also on the presidents recovery team responsible for pumping the story.

Half truth's, they'll keep you safe but still controversial(maybe they'll invite you to the club just to shut you up wink-wink). If I recall NYU Law School has a class devoted to the topic of "Silent Fraud", no? Did someone ace this class?


Cistercian's picture

 Capture.Obey or lose access to the "insiders".

  Disgusting non commitment to what function the press is supposed to have.

 And this is rampant.

  Thank God for ZH and the other good journalists out there....until they are outlawed for national security reasons.


trav7777's picture

Personality journalism.

The faces and personalities are more important than the facts.  So, you have to have access to "high profile" people.  It's like you're measured by the size and prestige of your rolodex and press people worship who you know and rub elbows with.

If you want truth, you've got here, RT, and Al Jazeera.  Pains me to say this but the network of the terrrists has a higher veracity than US media.  The system here is a big social club.

I mean I got video of Tim Russert (RIP) putting my son up on the Nats' home dugout during the 7th inning stretch.  He was at the game with Jim Carville.  How impartial can a journalist be when he is off-screen buddies with a frequent commentator?  He's gonna nail his friend to the wall?

It's ALL fucking theatre.

Overleveraged_and_Impatient's picture

This is great journalism indeed....

We've gotta figure out what we can actually "do" about all this instead of just be pissed off on a comment board.

I for one plan on leaving the country as soon as i get rich enough.

illyia's picture

Good luck with that leaving the country thing.

You sound overleveraged.

It could take a while to sort that out...

Consider taking it to the streets, instead?