The Wall Street Journal published a stunning report yesterday on how New York Federal Reserve Chairman Stephen Friedman enriched himself by purchasing Goldman Sachs stock while the Federal Reserve was propping up the investment bank:

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 New York Fed asked for a waiver, which, after about 2½ months, the Fed granted. 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.

Mr. Friedman also was overseeing the search for a new president of the New York Fed, an officer who has a critical role in setting monetary policy at the Federal Reserve. The choice was a former Goldman executive.

Stephen Friedman has the sterling credentials of an American aristocrat: Ivy League education, years at Goldman Sachs, numerous philanthropic efforts, and public service at the highest levels of government. The article proves that even our noblest and best citizens aren’t beyond even the most blatant conflicts of interest and greedy behavior. And so long as he can rely on soft, positive profiles from the media, replete with laudatory quotes from fellow noble and good gentlemen, he doesn’t have to worry about appearances.


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