INTERVIEW – Geithner: time to review U.S. central bank governance

INTERVIEW – Geithner: time to review U.S. central bank governance

Sat May 9, 2009 5:18am

By Glenn Somerville

WASHINGTON (Reuters) - U.S. Treasury Secretary Timothy Geithner said on Friday it was time to review how regional Federal Reserve banks are governed to ensure the public feels confident no conflicts of interest are at play.

Geithner was asked during a Reuters Television interview about the resignation on Thursday of Stephen Friedman, a member of Goldman Sachs Group Inc’s Board of Directors and a former chief at the firm, from his post as chairman of the New York Federal Reserve Bank’s board. The resignation came after questions were raised about Friedman’s purchases of Goldman Sachs stock.

In the interview, Geithner, who was president of the New York Fed until his approval for the Treasury post in January, called Friedman "an enormously dedicated, talented leader of the financial community." Still, Geithner said he and Fed Chairman Ben Bernanke felt it was time to take a look at how the central bank handles potential conflicts of interest.

Friedman, who had led the New York Fed’s board since January 2008, bought shares in Goldman in December and again this past January. During that period, the U.S. Treasury and the Fed were drafting plans to bolster the capital held by the nation’s big banks.

In his resignation letter, Friedman said he had complied with rules governing such purchases, but did not want to become a distraction while the Fed was fighting a recession. He repeated on Friday that he did not break any rules.

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