NY Fed Chair Quits Over Goldman Ties

Friedman upped stake in bank after it fell under Fed supervision
By Rob Quinn,  Newser Staff
Posted May 8, 2009 1:53 AM CDT
Stephen Friedman, then assistant addresses members of the Detroit Economic Club during a luncheon in this file photo. c    (AP Photo/Carlos Osorio, file)
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(Newser) – The chairman of the Federal Reserve Bank of New York has abruptly stepped down amid criticism of his ties to Goldman Sachs, the Wall Street Journal reports. Stephen Friedman, who increased his holdings in Goldman after it became a bank holding company under Fed supervision, denied acting improperly. But he said the accusations were a distraction from the Fed's work.

"Although I have been in compliance with the rules, my public service-motivated continuation on the Reserve Bank Board is being mischaracterized as improper," Friedman wrote in his resignation letter. Firedman asked for and received a waiver to remain on Goldman's board after it became Fed-regulated. But lawyers at the Fed were not told that Friedman bought another $3 million in Goldman shares while the waiver was pending.