In January, the House Oversight Committee chaired by Edolphus Towns held a hearing that centered on the AIG bailout. Among those testifying were Treasury Secretary Tim Geithner, former secretary Henry Paulson, FED General Counsel Thomas Baxter and most interestingly Stephen Friedman, "the former chairman of the board of the New York Federal Reserve Bank and a member of the board of directors of Goldman Sachs."
Consider; Friedman was chairman of the New York FED while sitting on the board at Goldman Sachs. Fed rules prohibit a Fed member from sitting on a bank board, but Friedman was granted a "waiver" by the Fed Board of Governors in Washington D.C. a waiver request that was spearheaded by none other than Tim Geithner, then President of the New York Fed at that time in January, 2009 when the "waiver" for Friedman was granted.
This alone should raise suspicion, (as Friedman, then Chair of the New York Fed and member of Goldman Sachs board of directors) was found to have "purchased 52,600 shares of Goldman stock"" whose" purchases had risen millions of dollars in value"" while serving on both boards!
To all this it must be remembered that AIG received an $87 billion bailout by the Federal Reserve in November 2008 (of which [we later learned in March, 2009] Goldman Sachs was the prime recipient of $13 billion) and that the N.Y. Fed (as part of the bailout) had AIG pay its "counterparties" (Goldman Sachs, Bank of America and Merrill Lynch) "full value for insurance on mortgage- backed securities that had tanked when the housing bubble burst.
Representative Stephen Lynch (D. Mass.), a member of Towns "Oversight Committee" has raised questions of insider trading regarding Friedman's purchases as well as the entire AIG bailout and has asked for a continued investigation by Congress and the Justice Department.
Historically, there is precedent investigating and later regulating the "Byzantine" inner workings of the financial industry who were the perpetrators of the 1929 stock market crash and the subsequent "great depression." The "Pecora Commission" in 1933 set the stage for effective governmental regulation and oversight that put the reins on the financial industry that remained in force until deregulation was formally institutionalized in 1999 with Clinton signing into law the "Graham, Leach, Biley Act",( that overturned the governmental regulations that were initiated by the Pecora Commission).
Our "great recession" (and the culpability of our financial behemoths in precipitating the latest financial meltdown as well as the subsequent economic calamity), demands official governmental action take place. Whether any alleged individual perpetrators are brought to justice (which they should be) may be legally hard, (if not impossible) to do, particularly if it's found they acted within the "technically" legal framework of the law (that allowed for their moral and ethical failings).
New law needs to be enacted that closes legal loopholes that suspected scoundrels use to work the system to their benefit; and in particular, those rules that allow for all the incestuous ties between corporate and government officials to remain legal.
 Friedmanism at the FED, How former New York Fed chair Stephen Friedman made a bundle on the AIG bailout", by Greg Kaufman, The Nation, March 15, 2010.
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