By the banks, for the banks, of the banks

This little news item tends to demonstrate why looking to the monetary authorities to lead the economy out of the hole created by the financial institutions doesn’t make a whole lot of sense:

Stephen Friedman, the chairman of the Federal Reserve Bank of New York, abruptly resigned on Thursday, days after questions arose about his ties to Goldman Sachs. Mr. Friedman was chairman of the New York Fed at the same time he was a member of Goldman’s board. He also had a substantial stake in the firm as the Fed was crafting a solution to keep Wall Street banks afloat.

Meanwhile, another Goldman capo was running the U.S. Treasury until recently. And Larry Summers, Obama’s economics advisor, collected 135,000 from Goldman for a one-day visit.