The Federal Reserve Bank of New York shaped Washington's response to the financial crisis late last year, which buoyed Goldman Sachs Group Inc. and other Wall Street firms. Goldman received speedy approval to become a bank holding company in September and a $10 billion capital injection soon after.
During that time, the New York Fed's chairman, Stephen Friedman, sat on Goldman's board and had a large holding in Goldman stock, which because of Goldman's new status as a bank holding company was a violation of Federal Reserve policy.
The New York Fed asked for a waiver, which, after about 2½ months, the Fed granted. While it was weighing the request, Mr. Friedman bought 37,000 more Goldman shares in December. They've since risen $1.7 million in value.
Using the argument that he does not actually decide Fed policy, Mr Friedman oversaw the search for a new NY Fed President after Tim Geithner's departure for the Treasury (we all know how that worked out), during which he found former Goldman alum William Dudley.
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