More examples can be found in the second half of the report.
Dec. 15 (Bloomberg) -- Theo Lubke, who headed the Federal Reserve Bank of New York’s efforts to reform the private derivatives market, joined Goldman Sachs Group Inc. to help Wall Street’s most profitable firm navigate the looming overhaul of financial regulations.
Lubke, 44, started this month as chief regulatory reform officer in Goldman Sachs’ securities division, according to a memo obtained by Bloomberg News. The newly-created role will allow Lubke to “work closely with divisional and firm-wide leadership to implement regulatory reform legislation,” the memo said.
Goldman Sachs is hiring Lubke five months after Congress mandated the regulation of the $583 trillion over-the-counter derivatives market, which complicated efforts to resolve the financial crisis. The reforms threaten to cut profits at dealers because they will make swaps prices known to the public. Lubke’s new firm employs a former New York Fed president and has an ex- Fed board chairman as a director. The current president of the New York Fed, William Dudley, also worked there.
“It’s a pattern,” said Charles Geisst, a finance professor at Manhattan College in Riverdale, New York, who has written about Wall Street’s history. “It’s troublesome stuff and there needs to be some regulation so people don’t do it and undermine public policy.”
Michael DuVally, a spokesman for Goldman Sachs who confirmed the contents of the memo, declined to comment.
Lubke is the latest regulator to be hired by Wall Street’s most profitable securities firm. Bankers who worked at Goldman Sachs have also become regulators.
“That street goes both ways,” said Geisst, author of books including “The Last Partnerships: Inside the Great Wall Street Money Dynasties” (McGraw-Hill, 2001). “They go from Goldman to the Fed and they go from the Fed to Goldman, and that’s the important part of it.”
Other firms also have ties to the central bank and the government. Last week, Citigroup Inc., the biggest bailout recipient among U.S. banks during the financial crisis, hired former White House Budget Director Peter Orszag to be vice chairman of its investment-banking division.
Dudley, a former partner at Goldman Sachs and its chief U.S. economist for a decade, joined the New York Fed in 2007 and then succeeded Geithner as the central bank’s president in 2009. E. Gerald Corrigan, who headed the New York Fed from 1985 to 1993, joined Goldman Sachs in 1994, where he went on to be co- chair of its global risk-management committee and co-chair of global compliance and control.
Stephen Friedman, a former chairman of Goldman Sachs’ board, quit as chairman of the New York Fed’s board of directors in May 2009 to avoid the appearance of a conflict of interest over his ties to the investment bank. Friedman, who served as Goldman Sachs’s co-chairman with Robert Rubin from 1990 to 1992 before Rubin became Treasury Secretary, remains a Goldman Sachs board member.
Geithner, who was named Treasury Secretary in January 2009, hired former Goldman Sachs lobbyist Mark Patterson as his chief of staff. Patterson recused himself for two years from any issues that relate specifically to the bank, which he left in April 2008.