Friedman spent 30 years at Goldman and has close ties to the core group of Goldman alumnae who held sway in the Treasury Department, including former Treasury secretary Robert Rubin and Bush Treasury Secretary Henry Paulson. Obama Treasury Secretary Timothy Geithner was president of the New York Fed when Friedman headed its board.
Friedman resigned from the Board of the NY Fed in May, 2009, amid questions about the stock purchases in Goldman Sachs made after Goldman became a bank holding company. According to Wall Street Journal on May 8, 2009, Goldman shares purchased in December 2008 and January 2009, gave Mr. Friedman a $3 million paper gain in May 2009 after the stock rallied. It's bad enough that Friedman owned Goldman shares while involved in policy discussions that would affect the bank. The fact that he went and bought more shares is breathtaking. The ethically challenged banker could not admit he had done anything wrong. In his resignation letter he complained "... my public service motivated continuation on the reserve bank board is being mischaracterized as improper."
Friedman is also Chairman Emeritus of the Board of Columbia University, Chairman Emeritus of the Executive Committee of the Brookings Institution, and a member of the Council on Foreign Relations. Have you ever wondered why the elite universities never study how the Fed and the mega-banks cause the "business-cycle" in the economy? Do you think that Columbia would be friendly to potential professors of economics capable of determining what is wrong with our current banking/monetary system, what is wrong with the enmeshment of the financial industry and Government, and able to envision practical alternatives? Plan on sending your son or daughter to Columbia? Good luck with that.
Goldman Chief Lloyd Blankfein is the current CEO and Chairman of Goldman Sachs who replaced Hank Paulson after the May 31, 2006, nomination of Paulson as Secretary of the Treasury. He joined Goldman's commodities trading arm in 1981 and earned a total of $53.4 million in 2006, making him one of the highest paid executives on Wall Street. In 2007, he earned a total compensation of $54 million.
While Treasury Secretary Henry Paulson was considering how to respond to the collapse of Lehman Brothers, little did he know that American International Group, the world's largest insurer, was also on the brink of collapse. When AIG called for help, one of the Wall Street chief executives participating in the meeting was Lloyd C. Blankfein. Few knew that Goldman was AIG.'s largest trading partner, and an AIG collapse would have cost Goldman up to $20 billion, according to six people speaking off the record.
Days later when AIG's collapse became public, David A. Viniar, Goldman's CFO, assured analysts on September 16, 2008, that his firm's exposure was "immaterial". The same day, Government officials who had let Lehman die and were initially against bailing out AIG, coughed up $85 billion for the insurance company, offered it a chance to sell its assets in an orderly fashion and theoretically repay taxpayers. The plan saved AIG's trading partners but decimated its shareholders.
A Goldman spokesman, Lucas van Praag, later disputed the $20 billion Goldman risk, and claimed that Mr. Blankfein participated in the Fed discussions to safeguard the entire financial system, not Goldman's interests, but declined to comment on what Blankfein and Treasury Secretary Paulson talked about during the bailout discussions. A Treasury spokeswoman also declined to comment about the AIG bailout and Goldman's role.
Edward Liddy was on the board of Goldman Sachs from 2003 to 2008, when he resigned to become CEO of AIG. He was selected by Henry Paulson for both roles. When U.S. Treasury Secretary Paulson chose Liddy, the former Allstate Chairman, to head AIG after the government's bailout of the insurance giant, he was turning to an old buddy. Five years earlier, when Paulson ran Goldman Sachs Group Inc., he picked Liddy to join that board too.
Liddy attracted national attention in October 2008 for defending a controversial $440,000 AIG corporate executive retreat at the luxury St. Regis Resort in Monarch Beach, California. Before Congress, Liddy stated that such retreats "are standard practice in our industry." During the U.S. presidential debate on October 7, 2008, candidate Obama mentioned the retreat and said, "The Treasury should demand that money back and those executives should be fired." Obviously, that didn't happen.
Liddy publicly urged employees to return $165m in bonuses and suggested that returning at least part of the bonus was preferable to legal action, in deference to the sanctity of contracts. He called the bonuses "distasteful" before Congress, however, an open resignation letter of Jake DeSantis revealed that Liddy had accelerated more than a quarter of AIG's bonuses by three months, "hardly something that one would do if he truly found the contracts "distasteful.""
Liddy owns 27,129 shares in Goldman Sachs, currently worth just over $3 million. In April 2009 members of Congress called for Liddy to sell these shares, as they create a conflict of interest due to Goldman Sachs' receipt of bailout money. About two-thirds of Liddy's holding was restricted and could not be sold until May 31, 2009. If he sold his shares, let me know. I tried checking and found nothing.
William Dudley, formerly a partner and managing director at Goldman, Sachs & Company, is now 10th president and CEO of the Federal Reserve Bank of New York - hired by then-President Tim Geither - where he is vice chairman and a permanent member of the Federal Open Market Committee (FOMC), the group responsible for formulating the nation's monetary policy. Before that, he was executive VP of the Markets Group at the New York Fed.
E. Gerald Corrigan is currently a partner and managing director in the Office of the Chairman at Goldman Sachs and was appointed chairman of GS Bank USA, the bank holding company of Goldman Sachs, in September 2008. Corrigan joined the New York Federal Reserve Bank in 1968 where he remained for twenty-five years, becoming Vice President in 1976, and serving as a Special Assistant to Federal Reserve Board Chairman, Paul Volcker in Washington, D.C. Like Volcker, he is also a member of the Group of Thirty.