Lawmaker Seeks Fed Stock Ownership Waiver Records

Friday, 19 Mar 2010 11:25 AM

 

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The head of the House of Representatives' Oversight Committee said on Friday he had asked the Federal Reserve to provide all documents relating to a rule waiver that allowed then-New York Fed Board Chairman Stephen Friedman to hold and purchase stock in Goldman Sachs Group.

In a letter to Fed Chairman Ben Bernanke dated March 18, Committee Chairman Edolphus Towns also asked for all documents pertaining to all waivers of Fed bank stock ownership rules for regional Fed board members dating back 10 years.

"At a time when Mr. Friedman was prohibited from owning Goldman Sachs stock, he bought over a million dollars more of it without notifying the Federal Reserve," said Towns.

"This raises serious questions about transparency, fairness and the appearance of a cozy relationship between Wall Street and the government."

Towns asked Bernanke for the documents to be delivered by March 25.

A Fed spokeswoman confirmed the Fed had received the letter and said it would respond.

Friedman, a retired chairman of Goldman Sachs, resigned as chairman of the New York Fed board last May after reports of his purchases of Goldman Sachs stock in December 2008 and January 2009 drew public scrutiny.

Friedman remains a Goldman board member. Last November, the Fed said it would no longer allow regional Fed bank directors own shares in financial firms.

Under prior rules, regional Fed directors selected by the central bank's board of governors, such as Friedman, were only barred from owning shares in banks regulated by the U.S. Federal Reserve.

Friedman's ownership of Goldman stock violated that policy once the firm, gripped by the financial crisis, converted into a bank holding company in order to qualify for direct aid from both the Treasury and the Fed.

© 2014 Thomson/Reuters. All rights reserved.

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