Federal Reserve Insider Theft

Greg Palm was legal counsel of Goldman Sachs and chairman of the Federal Reserve Bank of New York during the financial crisis. Mr. Palm had inside knowledge of the planned bailouts, and he traded on that insider knowledge to make great profits for himself. Insider trading is theft and it is illegal.

When will Mr. Palm be prosecuted for theft and insider trading?

Friedman, 72, who is still a Goldman director, bought 37,300 shares at an average of $80.78 each on Dec. 17. Five weeks later, he picked up 15,300 more at an average of $66.61. By yesterday, the stock had doubled to $133.76, giving Friedman a paper profit of $3 million.

Now, the U.S. House Oversight and Government Reform Committee is investigating Friedman’s stock purchases. It wants to know why he was permitted to buy stock in a bank he was regulating as chairman of the New York Fed.

Friedman held both that post and his Goldman board seat when the firm became a bank holding company in September 2008. The Federal Reserve Act forbids an official at the New York Fed in his position from also being a director of a bank or buying its stock.