MORE DETAIL ON MORAL HAZARD AT THE NY FED

I noted before that the NY branch of the Federal Reserve had an incestuous relationship with the Wall Street MOTU and thanx to Atrios and David Sirota, I found this new detail:

MAY 4, 2009 USA Inc.: The State of Capitalism
New York Fed Chairman's Ties to Goldman Raise Questions
Wall Street Journal

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 37,300 more Goldman shares in December. They've since risen $1.7 million in value.

Mr. Friedman also was overseeing the search for a new president of the New York Fed, an officer who has a critical role in setting monetary policy at the Federal Reserve. The choice was a former Goldman executive.

Do you recall the old saying, "What's good for GM is what's good for America"?