November 2009

Did you know that a director from Goldman Sachs (with ownership of company stock) was also serving as a director of the New York Federal Reserve as it funneled bailout funds to Wall Street at the height of the financial crisis?

Appalled? Well, at least it won't happen again: that loophole was closed last week in a tightening of restrictions over directors at the Fed, according to a New York Times article, which says "the new policy was the latest in a string of recent announcements that appear aimed at bolstering the Fed’s credibility as a regulator at a moment when Congress is trying to overhaul financial regulation and when lawmakers in both parties have accused the central bank of being beholden to the financial industry."

This was exacerbated by reports in March that conflicts of interest and favoritism may have been a part of $12.9 billion beleaguered American International Group paid (from its bailout money!) to Goldman Sachs -- where then-Treasury Secretary Henry Paulson had previously worked as chief executive. In April, Goldman announced it would pay back the government for its own bailout funding and just three months later announced that large profits would be bringing large year-end bonuses for workers. In fact, the company is reportedly "on track to make the biggest employee payout in the firm's 140-year history."

Of course, none matched the 2006 record set by Goldman Sachs for the largest bonus ever paid to an executive: $53.4 million to its chief executive, Lloyd Blankfein.

The IRS, in conjunction with the Treasury, has released its "priority guidance plan" of 315 projects to be completed over a twelve-month period, from July 2009 through June 2010. "This year’s plan will address a variety of issues, including recent legislation, the current economic environment, and important international issues," the IRS said in a press release.

New reports show that the Federal Deposit Insurance Corporation (FDIC), the institution responsible for bailing out troubled financial institutions so as to avoid nasty scenes like this one, may have overexerted itself during the latest financial crisis. According to the government corporation’s quarterly bank profile, a snapshot of the banking industry’s overall well being, the FDIC is officially in the red, and has been since September.

A measure that would subject the U.S. Federal reserve to a full and complete audit by the Government Accountability Office (GAO) passed the House Financial Services Committee on Thursday, 43-26, as an amendment to the larger financial reform legislation.