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New York Fed Chairman Resigns Despite Being Totally Innocent

Last night Stephen Friedman resigned from his position as chairman of the board of the Federal Reserve Bank of New York, after questions were raised about his sizable collection of shares in Fed-regulated Goldman Sachs.

Friedman's status as a shareholder in Goldman didn't become a violation of Fed policy until it became a bank holding company in December, whereupon he sought a waiver for himself so that he could remain chairman. This seems not-unreasonable. What's weird is that he then started amassing a bunch more of Goldman stock:

While the waiver was under consideration, Mr. Friedman in December bought 37,300 more Goldman shares. He also bought more shares the day after the waiver came through.

Celebrating, we guess. According to Friedman, he sees "no conflict whatsoever in owning shares" of Goldman, which is, of course, absurd; Molly the Cow could see there is a conflict there. In his resignation letter, Friedman said he was leaving because "the Federal Reserve System has important work to do and does not need this distraction." Oh, yes, the old "distraction" chestnut. We've heard that one before. In this case we think it means, "I'm getting out of here before the grainy pictures of me in smeared lipstick stumbling off Lloyd Blankfein's yacht come out."

Chairman of N.Y. Fed Quits Amid Questions [WSJ]
UPDATE: DealBook has the the full translation of Friedman's letter.

Photo: Patrick McMullan