Current Position: Chairman, President’s Intelligence Advisory Board and Intelligence Oversight Board (since 2006)
Why He Matters
President George W. Bush’s director of the National Economic Council resigned as the chairman of the board of the Federal Reserve Bank of New York when his ties to Goldman Sachs raised ethical questions about his role in the 2008 Wall Street bailout. He has been chairman of the President's Intelligence Advisory Board (PIAB) since 2006.
During the 2008 credit crisis, Friedman governed the Fed branch with the closest ties to Wall Street. He had a hand in shaping the government's response to the 2008 financial collapse, including the $700 billion bailout plan, and a $10 billion capital injection to help Goldman Sachs stay afloat.
Friedman spent 30 years at Goldman and has close ties to the core group of Goldman alumnae who held sway in the Treasury Department, including former Treasury secretary Robert Rubin and Bush Treasury Secretary Henry Paulson. Obama Treasury Secretary Timothy Geithner was president of the New York Fed when Friedman headed its board.
At a Glance
Current Position: Chairman, President’s Intelligence Advisory Board and Intelligence Oversight Board (since 2006)
Chairman, Stone Point Capital, LLC (since 2005)
Career History: Chair, Federal Reserve Bank of New York (2008-2009); Economic Adviser to President George W. Bush and Director of National Economic Council (2002 to 2004); Senior Principal, MMC Capital (1998 to 2002); Senior Chairman, Goldman Sachs & Co. (1994 to 1998)
Birthday: December 21, 1937
Hometown: Brooklyn, N.Y.
Alma Mater: Cornell University, B.A., 1959; Columbia Law School, LLB, 1962
Spouse: Barbara Benioff
Religion: N/A
Office: Federal Reserve Bank of New York, 33 Liberty Street, New York, NY 10045-0001, 212-720-5000; 20 Horseneck Lane, Greenwich, CT 06830-6327, 203-862-2900
Email
Web site
Path to Power
Friedman is a quintessential New Yorker. Born in Brooklyn in 1937, he went to Oceanside high school and then to Cornell University, where he met his wife, Barbara Benioff Friedman. Both graduated in 1959. Friedman returned to New York City to attend Columbia Law School, graduating with a bachelor’s of law in 1962.
At Cornell, Friedman was a star wrestler, and has been inducted into Cornell’s Athletic Hall of Fame. He even won a gold medal at the 1961 Maccabiah Games in Israel.
Friedman joined Goldman Sachs & Co. in 1966, the same year as Robert Rubin, with whom he would later share chairmanship of the investment bank. He stayed for 28 years, rising through the ranks to become a partner in 1973, and was named vice chairman of the investment bank in 1987 and co-chairman in 1990.
In 1994, bad bets on the direction of interest rates caused Goldman’s profits to plunge to $500 million, a fraction of the $2.6 billion they made the previous year. The drop spurred an exodus of senior partners, but Friedman’s September resignation still came as a surprise to many. The man who succeeded him as chairman and CEO, current New Jersey governor Jon Corzine, is widely credited with taking the company in a new direction, which included going public in 1999.
In 1998, Friedman joined the insurance and investment firm Marsh & McLennan, working as a senior principal for their investment arm. He currently serves as the chairman of the board of the private equity firm Stone Point Capital, which spun off from Marsh & McLennan.
Political Ties
After leaving Goldman Sachs, Friedman turned his focus to politics. In 1999, Bill Clinton appointed Friedman to the President’s Foreign Intelligence Advisory Board. In 2005, Bush named Friedman chairman of that board, a surprise second-term replacement for Brent Scowcroft. He has been chairman of the Intelligence Oversight Board, an independent body that assesses the state of national intelligence, since January 2006.
Friedman served as a Bush adviser on economic policy and director of the National Economic Council from December 2002 to December 2004, although his appointment was controversial due to the size of his investment portfolio. He left the post as part of an exodus of Republican advisers.
In January 2008 Friedman became director and chairman of the board of the Federal Reserve Bank of New York. He was appointed by the Federal Reserve Board of Governors, which is headed by Federal Reserve Chairman Ben Bernanke and made up of mainly career academics and civil servants.
In the fall of that year, Friedman helped oversee a Wall Street bailout that, among other things, allowed Goldman Sachs to stay afloat by becoming a bank holding company. Goldman also received a $10 billion capital injection.
In May 2009, a Wall Street Journal article questioned Friedman's ties to the bank.
A few days later, Friedman submitted his resignation, saying he had remained on the board "to provide continuity," but that his work had been "mischaracterized as improper."
The Issues
Supply-side economists at first balked at
Bush’s choice of Friedman for economic adviser. Friedman, like his former colleague Rubin, had a reputation for focusing on reducing the deficit, not fostering growth. Freidman took pains to support Bush, focusing on economic growth coming out of the 2001 recession and Bush’s plan for massive tax cuts.
The controversy over Friedman stemmed mainly from his role as a board member for the anti-deficit Concord Coalition, as well as a trustee and contributor to the left-leaning Brookings Institution. He was viewed as part of a group of mainstream Republicans nominated to the Bush administration instead of more ideological true believers.
But Friedman ultimately gained respect from his colleagues for his management style. ''He's very good at working with people and trying to draw out all the pluses and minuses in whatever is being considered,'' Rubin said of his former colleague.
The Network
As former chair at the New York Fed, Friedman worked with former Fed President Timothy Geithner, who is Obama's Treasury secretary. He also worked with Federal Reserve Chairman Ben Bernanke.
Friedman’s long career at Goldman Sachs put him in close contact with many who shuttle between Washington and Wall Street. Henry Paulson was a protégé of Friedman’s at Goldman. Paulson, a former Dartmouth wrestler, told the New York Times about a memorable weekend in the mid-1970s.
“He [Paulson] made the mistake of challenging his mentor to a wrestling match at a gathering of the firm's executives. Mr. Paulson, a tall, broad-shouldered former wrestler and football player, went to the mat with Mr. Friedman, unaware of the wiry Mr. Friedman's accomplishments. Mr. Friedman repeatedly pinned Mr. Paulson, who frequently recounts the story, adding the lesson that he learned: Always do your homework.”
Friedman's boardroom experience is not limited to Goldman. Friedman has sat on a slew of influential boards, including those of Wal-Mart, Risk Capital Reinsurance and the Concord Coalition. From 1997 to 2002, Friedman was a member of the board of Fannie Mae, the mortgage giant that collapsed under the weight of subprime mortgage defaults and was the subject of a government takeover in September 2008.
Friedman has been chairman of Columbia University’s board of trustees and is chairman emeritus of the Brookings Institution. He also sits on the board of the Council on Foreign Relations. He is a trustee of Memorial Sloan-Kettering Cancer Center and the Aspen Institute, a non-profit dedicated to leadership issues.
Campaign Contributions
Friedman’s list of political donations is pages long and primarily tilted towards Republicans. According to the
Center for Responsive Politics, he regularly donated $5,000 to $10,000 to the Republican National Committee during the 1990s, topping out with a $50,000 donation in 2000.
But Friedman has also given to Democrats. He donated $1,000 in 1997 to Sen.
Chuck Schumer, the Wall-Street-friendly senator from New York. He gave another thousand to fellow Goldman alum and Democrat
Jon Corzine’s successful 2000 run for New Jersey governor.
