Report: Fed directors benefited from bailouts

Multiple directors or former directors of the Federal Reserve banks who played a key role in the 2008 bailouts had an apparent conflict of interest, according to a Government Accountability Office (GAO) report. These directors had business relationships with companies and banks that received large infusions of government money.

The office of Sen. Bernie Sanders, I-Vt., who caucuses with the Democrats, noted that the report did not name any names, "but unambiguously described several individual cases involving Fed directors that created the appearance of a conflict of interest." The group of 18 people connected to both the Federal Reserve and a bailed out company included: the CEO of General Electric, Jeffrey Immelt (who is now President Obama's jobs czar); Stephen Friedman of Goldman Sachs Group Inc.; and Jamie Dimon, the CEO of JP Morgan Chase.

Friedman chaired the Federal Reserve Bank of New York in 2008, when the New York Federal Reserve approved Goldman Sachs as a bank holding company, which Sanders' office explains "[gave] it access to cheap Fed loans." Friedman received a waiver from the Federal Reserve to keep his chairmanship, even though he was "a current board member and shareholder of Goldman Sachs Group Inc." When Friedman received this waiver, "the Federal Reserve Board was unaware that the then-FRBNY chairman had purchased additional shares in Goldman Sachs via an automatic stock purchase program," according to the full report (here).

The Federal Reserve Bank of New York also consulted with General Electric about creating an "emergency program to assist with the commercial paper market" while Immelt served as a New York Fed director, the report indicates. Sanders' office adds that "the Fed later provided $16 billion in financing for GE under the emergency lending program" even while Immelt held his position with the Federal Reserve Bank of New York and GE.

Dimon served as director for the Federal Reserve Bank of New York when JP Morgan received $29 billion through the Federal Reserve in order to pruchase Bear Stearns. Sanders' analysis of the larger GAO report says that "Dimon also convinced the Fed to take risky mortgage-related assets off of Bear Stearns balance sheet before JP Morgan Chase acquired this troubled investment bank."

You can read the Sanders report on the GAO audit below. Find the full GAO report here.
The Washington Examiner