I was surprised to see a chairman of the Federal Reserve Bank of New York was resigning, and then realised from the reports it was a non-exec. Institutional Risk Analyst put it in perspective:

“And speaking of the fall of the elites, FRBNY Chairman Steve Friedman finally resigned yesterday, ending a scandalous period when the greater community of present and past employees of Goldman Sachs  JPMorgan Chase  and other dealers was arguably in control of the most important arm of the US central bank.

“The fact that the Board of Governors appointed former GS banker Freidman as a “C” class director, who are meant to represent the public interest and not be past officers of regulated banks, was scandal enough. But then, when GS formally became a bank holding company last year, the Board failed to remove Friedman when his conflict became acute. The Board also failed to appoint another “C” class director, making it almost seem that the Board wanted to assist in the GS operation to influence the operations of a Federal Reserve Bank. ”

The governance issues in US economics has been a sad joke, with public rep appointments to major boards, and in arbitration, often heavily stacked in favour of finance insiders. Apparently this continues even at the highest levels.

“Remember that the board of directors of the FRBNY selected Tim Geithner as President, who then bailed out AIG to the benefit of GS and the other OTC derivatives dealers that were facing AIG. That is why a congressional inquiry is needed to understand just why the Fed Board and, in particular, Fed Vice Chairman Don Kohn, tolerated the Freidman conflict and arguably neglected their statutory duty to ensure the proper governance and operation of a Federal Reserve Bank.”

Looks like a lot of opportunity for Congress to investigate, if it could get off its backside.

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