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New York Federal Reserve Chairman's Ties to Goldman Sachs Raise Questions
http://news.google.com/news?q=%22New%20York%20Fed%20Chairman%27s%20Ties%20to%20Goldman%20Raise%20Questions%22&sourceid=navclient-ff&rlz=1B3GGGL_enUS310US310&um=1&ie=UTF-8&sa=N&hl=en&tab=wn ^ | MAY 4, 2009 | By KATE KELLY and JON HILSENRATH

Posted on 05/04/2009 8:06:51 AM PDT by dennisw

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.

The case illustrates what a tangle of overlapping interests can arise at a hybrid institution like the New York Federal Reserve Bank, especially as the U.S. government, in addressing the financial and economic turmoil, grows ever more deeply enmeshed in American business and banking.

Mr. Friedman, who once ran Goldman, says none of these events involved any conflicts. He says his job as chairman of the New York Fed isn't a policy-making one, that he didn't consider his purchases of more Goldman shares to conflict with Fed policy, and bought shares because they were very cheap.

Last week, following questions from The Wall Street Journal, Mr. Friedman, 71 years old, disclosed he would step down from the New York Fed at year end. He added: "I see no conflict whatsoever in owning shares."

(Excerpt) Read more at news.google.com ...


TOPICS: Business/Economy; News/Current Events
KEYWORDS: america2point0; bankingcrisis; cultueofcorruption; democratscandals; urlisnotthesource

1 posted on 05/04/2009 8:06:51 AM PDT by dennisw
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To: TigerLikesRooster; Dustbunny; JDoutrider; CottonBall; autumnraine; sickoflibs; April Lexington; ...

Gloom and doom ping list


2 posted on 05/04/2009 8:08:41 AM PDT by dennisw (Your action becomes your habit. Your habit becomes your character, that becomes your destiny)
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To: dennisw

America got p’unked in 2008 and we got a Socialist America. Way to go. Hope there are criminal investigations into how the banking crisis came to be and how certain people wound up with billions of taxpayer money.


3 posted on 05/04/2009 8:10:09 AM PDT by a fool in paradise (IRONY - we know more about the First Dog's historical papers than we do of President Barack.)
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To: dennisw

Questions are all that will be raised. Questions as to Goldman Sach’s influence if not total control of the US government have the same practical effect as do question as to the legitimacy of 0bama’s birth certificate. Page 14 stories in 20% of newspapers, then it’s “see ya”.


4 posted on 05/04/2009 8:12:05 AM PDT by Attention Surplus Disorder (Mr. Bernanke, have you started working on your book about the second GREATER depression?")
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To: dennisw

http://www.goldmansachs666.com/

The clinton bubble


5 posted on 05/04/2009 8:12:18 AM PDT by FromLori (FromLori)
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To: dennisw

This is how you get socialism. People see the corruption and decide that the market is rigged and turn to the government who winds up taking over.

Meanwhile, certain people in government are the real problem. The bankers were bailed out and the market was denied the opportunity to take care of itself by having people and institutions fail. Bankers and people in government are golf buddies...


6 posted on 05/04/2009 8:13:29 AM PDT by misterrob (FUBO----Just say it, Foooooooooooooo Bohhhhhhhhh. Smooth)
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To: dennisw

This is how you get socialism. People see the corruption and decide that the market is rigged and turn to the government who winds up taking over.

Meanwhile, certain people in government are the real problem. The bankers were bailed out and the market was denied the opportunity to take care of itself by having people and institutions fail. Bankers and people in government are golf buddies...


7 posted on 05/04/2009 8:13:37 AM PDT by misterrob (FUBO----Just say it, Foooooooooooooo Bohhhhhhhhh. Smooth)
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To: dennisw

Uh, the Federal reserve should raise a few eyebrows.


8 posted on 05/04/2009 8:15:12 AM PDT by servantboy777
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To: misterrob

I think this is how you get fascism...


9 posted on 05/04/2009 8:17:33 AM PDT by FromLori (FromLori)
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To: dennisw

How golden is that after backing the resident it seems to have all paid off most handsomely.

President Obama continued collecting money for his 2010 Senate re-election campaign even after he resigned his seat from Illinois, including a maximum $2,300 donation the day after Christmas from a top executive of a Wall Street firm that had received a government bailout.Four contributions - $4,800 in all - were donated to the Obama 2010 fund on Dec. 26, according to Federal Election Commission reports.The money came from some of Mr. Obama’s top presidential fundraisers: Bruce A. Heyman, managing director at Goldman Sachs, which received a $10 billion bailout last year; Steven Koch, vice chairman at Credit Suisse First Boston; and John Levi, a lawyer at the law and lobbying firm of Sidley Austin LLP.

The donations are legal, but the timing is unusual because Mr. Obama formally left the Senate on Nov. 16 and already had a surplus in his Senate campaign treasury.

http://www.washingtontimes.com/news/2009/mar/27/obama-raised-cash-even-after-leaving-senate/

From No Quarters...Let’s start with the numbers. Why is a first term Senator pulling down almost $300,000 a year from Goldman Sachs, Lehman Brothers, Bear Stearns, Fannie Mae, Freddie Mac, AIG, Countrywide Financial, and Washington Mutual? He has not even completed his fourth year in the Senate and received a total of $1,093,329.00 from these eight companies and their employees. (all data from OpenSecrets.org). John McCain’s numbers, according to OpenSecrets.org for the period 1990-2008 (i.e., 18 years worth of data) only collected $549,584.00. In other words, Barack is receiving $273,582.25 (and 2008 is not over) per year while McCain raised a paltry $30,532.44.
Want another shocker? Barack Obama has received more from one source–Goldman Sachs $542,252.00–than McCain has from all of the companies combined. Who the hell is more beholden to lobbyists? And why does a junior Senator from Illinois rate this kind of dough?

http://www.noquarterusa.net/blog/2008/09/21/baracks-wall-street-problem-is-now-americas/
“No doubt many donors give simply because they want to be part of history,” said Craig Holman, a campaign finance lobbyist for the non-partisan watchdog group Public Citizen.

“But donors and bundlers who represent special interests with business pending before the government and who dole out five-figure checks to the inaugural committee usually want a seat at the table with the new administration.”

Other bailed-out banks that have contributed to the inauguration fund include Goldman Sachs ($44,500) and JPMorgan Chase ($30,600).


10 posted on 05/04/2009 8:21:51 AM PDT by FromLori (FromLori)
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To: dennisw

I read not too long ago, and I will paraphrase the tale

that the Federal Reserve idea was originated by and sold to Congress by the leading bankers, as a means to solidify the interests of politicians that love to preside over government borrowing and the bankers that want to profit from providing the loans (buying and marketing the government debt).


11 posted on 05/04/2009 8:26:30 AM PDT by Wuli
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To: FromLori

BOOKMARK BUMP!


12 posted on 05/04/2009 9:07:17 AM PDT by penelopesire ("The only CHANGE you will get with the Democrats is the CHANGE left in your pocket")
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To: penelopesire

You might want to include this...

http://www.freerepublic.com/focus/f-news/2243818/posts


13 posted on 05/04/2009 9:11:05 AM PDT by FromLori (FromLori)
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To: Wuli

http://www.amazon.com/Creature-Jekyll-Island-Federal-Reserve/dp/0912986212

Is the best book on the Federal Reserve. It has 204 reviews at Amazon. You can learn a lot just from reading those reviews

The Feds justification for being brought into existence was to stabilize an anarchic banking system and prevent panics and depressions. It did a piss poor job this time around as it let banks and Wall Street run wild with bundled mortgages and credit default swaps. Senile hippie Greenspan was a cheerleader for derivatives, calling them exciting new vehicles for hedging risk


14 posted on 05/04/2009 9:24:16 AM PDT by dennisw (Your action becomes your habit. Your habit becomes your character, that becomes your destiny)
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To: Wuli

“that the Federal Reserve idea was originated by and sold to Congress by the leading bankers, as a means to solidify the interests of politicians that love to preside over government borrowing and the bankers that want to profit from providing the loans (buying and marketing the government debt)”

It has always occured to me that the best way to stamp out the influence of special interests is to restrict the scop[e of government power. If the Fed doesn’t exist, then private banks can’t manipulate the Fed into giving them money. The Fed is the problem, not some Chariman’s ties to some banker.


15 posted on 05/04/2009 9:57:18 AM PDT by Tublecane
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To: dennisw

The ONLY viable alternative to the “communists have taken over government” theory is the “Goldman Sachs has taken over government” theory.


16 posted on 05/04/2009 10:18:14 AM PDT by April Lexington (Study the constitution so you know what they are taking away!)
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To: misterrob

The textbook name for this oligarchy and it’s one of the principle reasons why socialism, communism, fascism or any other ism for that matter is doomed to eventudal failure.


17 posted on 05/04/2009 10:18:45 AM PDT by Red Dog #1
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To: Attention Surplus Disorder
Questions are all that will be raised. Questions as to Goldman Sach’s influence if not total control of the US government have the same practical effect as do question as to the legitimacy of 0bama’s birth certificate. Page 14 stories in 20% of newspapers, then it’s “see ya”.

Where, of course, they continue to blame Republicans for all of this...

18 posted on 05/04/2009 10:20:06 AM PDT by April Lexington (Study the constitution so you know what they are taking away!)
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To: dennisw
[sarc] It's The Money Power!!! [/sarc]
19 posted on 05/04/2009 10:21:37 AM PDT by Zionist Conspirator (Vaydabber Mosheh 'et-mo`adei HaShem 'el-Benei Yisra'el.)
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To: dennisw
If one were to study the history of banking in the United Sates, one would know that the banks, through constant unbridled greed, have taken the country to the brink of financial collapse just about every 20 years since 1776. This time, they managed to push us over the edge and, brilliantly, managed to take over the Federal government in the process to clean up the mess. Incredible!
20 posted on 05/04/2009 10:22:40 AM PDT by April Lexington (Study the constitution so you know what they are taking away!)
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To: dennisw
"The logic of the conspiracy theorists in this regard is, of course, impeccable: Goldman alumnus Josh Bolten runs the White House, while his former boss, Hank Paulson, runs the Treasury. They both speak regularly to former Treasury Secretary Bob Rubin, now over at Citigroup, who ran Goldman before Paulson and who keeps Paulson and Bolton dangling like puppets on a string. They all supposedly touch base with the heads of the Italian and Canadian central banks—both Goldman alumni—and with Robert Zoellick, head of the World Bank, ex Goldman. What's more Paulson is now getting his advice on how to handle the crisis from Ken Wilson, the recently retired Goldman partner and financial-institutions M&A banker, who Paulson just recruited to Washington to help him out. Already at Treasury were Goldman alumni Dan Jester, Anthony Ryan, David Nason and Bob Hoyt, the department's general counsel. And—the conspiracy crowd can't help but point out—Neel Kashkari, 35, a former vice-president at Goldman who Paulson recruited as assistant secretary of international affairs in 2006, has just been appointed—by Paulson—to run, on an interim basis, the new $700 billion bailout fund."

~~William Cohan, "Does Goldman Sachs Really Rule the World?" October 2008

21 posted on 05/04/2009 12:07:19 PM PDT by Travis McGee ("Foreign Enemies And Traitors" will be ready the first week of May.)
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To: Tublecane

“The Fed is the problem, not some Chariman’s ties to some banker.”

I agree. Maybe a first step (maybe a “populist” and possible step at this time) would be to cut 1/2 of the Fed’s mission out - “insuring economic growth”.

Left to insuring a stable currency, period, stability, predictability and soundness of long-term conditions, instead of volatility, will have greater play in the less artificial, more natural market place.

It is my view that the Fed’s mission vis-a-vis “economic growth” as made the major-event swings in the economy larger and more systemic, not less; than would have been seen without that mandate on the Fed.

What is the “growth” since 1995 mean, when the inflation that created it (the Fed, cheap money, resulting “leverage”) must now be rung out of the system? Not much.


22 posted on 05/04/2009 5:11:32 PM PDT by Wuli
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To: Tublecane

“The Fed is the problem, not some Chariman’s ties to some banker.”

I agree. Maybe a first step (maybe a “populist” and possible step at this time) would be to cut 1/2 of the Fed’s mission out - “insuring economic growth”.

Left to insuring a stable currency, period, stability, predictability and soundness of long-term conditions, instead of volatility, will have greater play in a less artificial, more natural investment market place.

It is my view that the Fed’s mission vis-a-vis “economic growth” has made the major-event swings in the economy larger and more systemic, not less; than would have been seen without that mandate on the Fed.

What is the “growth” since 1995 mean, when the inflation that created it (the Fed, cheap money, resulting “leverage”) must now be rung out of the system? Not much.


23 posted on 05/04/2009 5:12:49 PM PDT by Wuli
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To: dennisw

“The Feds justification for being brought into existence was to stabilize an anarchic banking system and prevent panics and depressions. It did a piss poor job this time around”

Frankly, from some economists I have read, the Fed, created a decade before the 1929 stock market crash, helped, with its policies, to contribute to the conditions that led to that crash and the depression. The depression was not CAUSED by “Wall Street”, stocks were simply on the “early warning end”, an early casualty of factors and forces that included Fed policy as well as trade protectionism. Wall Street did not create the bubble, it reflected, in stocks, a financial bubble that had been introduced into the system. If there had not been a “Wall Street”, that financial excess would have found some other outlet and eventually “crashed” as well. Media driven ignorance and politically biased non-wisdom has focused the public psyche on the “1929 crash”, as “leading” to the depression. It was a leading indicator of an inflated financial system, not the cause of it.

“as it let banks and Wall Street run wild with bundled mortgages and credit default swaps.”

That’s the SEC’s job, not the Fed’s.

SMEs (bundled mortgages) were around for more 20 years and not a problem. The problem they represented this time was not their nature but the massive, unhistorical, unprecedented portion of the total ($amount and $volume) of sub-primes contained within them, together (at the same time) as the total pool (good and bad) represented a giant real estate bubble. They represented a tipping point.

CDOs were no different. They represent “financial insurance”, in a manner not much different than you insure things. You don’t pay the full market value of what you insure, you pay a % that represents the calculated risk your insurer thinks they are taking. Again, remove the massive sub-prime bubble from within the overall mortgage bubble and you have a more normal housing downturn with a more normal default rate, and neither SMEs or CDOs are undermined.

SMEs and CDOs do not represent PRIME causes. The creation of the leverage in the economy originated with Fed policy. That changed the valuation of interest rates and risk, which from about 2002 meant that you paid less in interest to borrow money than you could earn on it in the bank. Therefore - due to Fed policy - borrowing WAS induced.

Blaming SMEs and CDOs is simply blaming the mechanisms that financial people must use to try to deal with monetary, interest rate and risk scenarios that originate with conditions laid down in the economy by the Fed.

SMEs and CDOs do, and did, what is in fact neutral, to either ups or downs - they spread the risk. In general it is a benefit. When the sub-prime mess caused the tipping point, the benefit - the spreading of risk, also meant that more institutions had assumed some of that risk.

But, under it all, was not an error in the concept, but the negligence in permitting the real estate and subprime bubbles - they represent the virus, they undermined the valuations, not the general concept of SMEs or CDOs.


24 posted on 05/04/2009 5:41:07 PM PDT by Wuli
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To: Wuli

“Left to insuring a stable currency, period, stability, predictability and soundness of long-term conditions, instead of volatility, will have greater play in the less artificial, more natural market place.”

If you want currency to be stable, the first thing to do would be to get rid of fiat paper money. The best solution would be to have a free market in money (that means no fiat money, no central bank, no gold standard, just private banks and private mints). I don’t see as how the Fed could ever dedicate itself to stabilizing currency. Its job, its entire reason for being, is to expand (and contract, but mostly expand) credit.

I don’t know where this idea ever came from that we need a central bank to keep inflation/deflation in check. Why does the money supply have to expand when production expands? What’s the matter with prices falling? Of course, this is all just theoretical mumbo-jumbo. The Fed has no interest in keeping the money supply stable relative to GDP, or however it’s put. It exists to counterfeit money so rich people can steal from the rest of us (no, really).


25 posted on 05/04/2009 6:50:10 PM PDT by Tublecane
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To: Wuli

I disagree. Wallt Street has proven it cannot be trusted with derivatives, CDOs and credit default swaps. They need to be limited and regulated and put on an open exchange. Not traded in the dark OTC style

I don’t believe in totally unregulated OTC markets in CDOs and CDS. We still have those markets by the way

Aside from all that, yes the Fed created a bubble via too low interest rates


26 posted on 05/04/2009 11:31:58 PM PDT by dennisw (Your action becomes your habit. Your habit becomes your character, that becomes your destiny)
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To: dennisw

“I disagree. Wallt Street has proven it cannot be trusted with derivatives, CDOs and credit default swaps. They need to be limited and regulated and put on an open exchange. Not traded in the dark OTC style.”

Opposing the manner of trading, is not the same as claiming that by nature a certain financial instrument is or was the problem.

Even many in the financial services industry have before and in larger numbers recently proposed the “clearing house” idea for trading CDOs and credit default swaps. It won’t change the basis of what they do (financial insurance) or how they do it (the risk calculations). It will help improve the “market” pricing of them, resulting, most likely, NOT in fewer of them but in buyers paying a possibly more realistic price for them. To the extent that more open pricing mechanism makes a better actual balance sheet for financial outfits, and others, that will be a good thing.

Regardless, even had that mechanism been in place, that transparency of trading CDOs and “swaps” WOULD NOT HAVE CHANGED THE DESTRUCTION IN THE UNDERLYING VALUES PRODUCED BY THE TIPPING POINT CREATED BY THE EXCESSIVE VOLUME OF SUB-PRIMES IN AN EXCESSIVE VOLUME OF MORTGAGES CREATED BY THE HOUSING MARKET BUBBLE.

SMEs were MADE attractive, and seemingly financially a good deal, by the Fed’s cheap money, low interest rate policies; NOT by the mere existence of the SME type of investment or the mere existence of CDOs.

The same Fed policy, running unchecked, destroyed the attractiveness of SMEs when the bubble the Fed created burst. None of which was due to the existence of CDOs and how they were traded. The inherent “leverage” in the system was made possible by the Fed’s policies, not by the use of CDOs. They simply put to use the inherent “leverage” (attractiveness of borrowing in dollar-denominated terms) that Fed policy created.


27 posted on 05/05/2009 9:58:19 AM PDT by Wuli
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To: Wuli

I blame Wall Street scum and government scum. Your problem is you let Wall St off the hook for their obviously thievery. You only have the Federal Reserve in your sights which is deficient

Funny thing is the Wall Street scum are mostly Democrats and contributed to Hillary and 0boma much more than John McCain

As far as raw numbers the CDS mess is much much larger than the CMO mess. And CDS triggered the insane level of greed where you make BULLSHIT insurance contracts with parties (AIG) you know cannot pay off (AIG) in case of default. But the short term profits and bonuses sure look great and made lost of people millionaires! You have me laughing as you try to lay it all off on easy money from the Fed. Which is only part of the story


28 posted on 05/05/2009 2:20:58 PM PDT by dennisw (Your action becomes your habit. Your habit becomes your character, that becomes your destiny)
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