Eliot Spitzer, Former Governor of New York, and Arianna Huffington, Editor and Founder of The Huffington Post have an enlightening conversation on Squawk Box. This must see clip features an outspoken and re-invigorated Spitzer making his first appearance on CNBC since he resigned as Governor 14 months ago.
Here is an excerpt of Spitzer's article on the power of the New York Fed, and in particular, about who is running it, published in Slate.com, as mentioned.
Fed Dread
The New York Fed is the most powerful financial institution you've never heard of. Look who's running it.
By Eliot Spitzer
Posted Wednesday, May 6, 2009, at 12:29 PM ET
The kerfuffle about current New York Federal Reserve Bank Chairman Stephen Friedman's purchase of some Goldman stock while the Fed was involved in reviewing major decisions about Goldman's futureāwell-covered by the Wall Street Journal here and hereāraises a fundamental question about Wall Street's corruption. Just as the millions in AIG bonuses obscured the much more significant issue of the $70 billion-plus in conduit payments authorized by the N.Y. Fed to AIG's counterparties, the small issue of Friedman's stock purchase raises very serious issues about the competence and composition of the Federal Reserve of New York, which is the most powerful financial institution most Americans know nothing about.
A quasi-independent, public-private body, the New York Fed is the first among equals of the 12 regional Fed branches. Unlike the Washington Federal Reserve Board of Governors, or the other regional fed branches, the N.Y. Fed is active in the markets virtually every day, changing the critical interest rates that determine the liquidity of the markets and the profitability of banks. And, like the other regional branches, it has boundless power to examine, at will, the books of virtually any banking institution and require that wide-ranging actions be takenāfrom raising capital to stopping lendingāto ensure the stability and soundness of the bank. Over the past year, the New York Fed has been responsible for committing trillions of dollars of taxpayer money to resuscitate the coffers of the banks it oversees.
Given the power of the N.Y. Fed, it is time to ask some very hard questions about its recent performance. The first question to ask is: Who is the New York Fed? Who exactly has been running the show? Yes, we all know that Tim Geithner was the president and CEO of the N.Y. Fed from 2003 until his ascension as treasury secretary. But who chose him for that position, and to whom did he report? The N.Y. Fed president reports to, and is chosen by, the Fed board of directors.
So who selected Geithner back in 2003?
Read the rest of the article here.
