Mark Felsenthal and Pedro da Costa
Posted July 25, 2011
WASHINGTON (Reuters) – Treasury Secretary Timothy Geithner, while head of the New York Federal Reserve Bank, granted a waiver that allowed his eventual successor William Dudley to hold on to investments in firms getting emergency help.
Dudley, a former partner at Goldman Sachs who at the time ran the New York Fed’s powerful markets desk, was allowed to maintain his financial stake in insurance giant AIG, whose government bailout helped prop up investment firms like Goldman Sachs.
Senator Bernie Sanders, an independent and a critic of the Fed’s financial bailouts, called the finding from a Government Accountability Office audit released on Thursday “disturbing.”
“(Three) days after the Federal Reserve Board authorized FRBNY (the Federal Reserve Bank of New York) to assist AIG — the then-FRBNY President granted … a waiver to a senior management official with financial interests in AIG and GE (General Electric) who was involved in decision making related to these two companies,” the investigative agency said.