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Thomas Baxter

Federal Reserve Bank of New York
Bachelors - University of Rochester; Law Degree – Georgetown

Baxter was the Federal Reserve Bank of New York’s general counsel during the “Steve Friedman Affair.”  Steve Friedman, (#22) – then the chairman of the NY Fed’s board of governors and a former chairman of Goldman Sachs - took advantage of what anyone but Thomas Baxter would consider inside information.   With knowledge of the then, November 2008, secret decision of the NY Fed to pay Goldman Sachs full price, $14-billion, for the virtually worthless credit default swap (CDS) positions owed Goldman by an insolvent AIG – Friedman purchased over 50,000 shares of Goldman stock in December 2008 and January 2009.  

In May 2009, Freidman’s Goldman Sachs trades became public knowledge after the Wall Street Journal published a brief article questioning Friedman’s ties to both Goldman and the New York Fed.  Friedman had been around Wall Street long enough to realize that discretion is the better part of valor and resigned from the NY Fed.   Unbelievably, upon Friedman’s resignation, Baxter, then the NY Fed’s general counsel and presumably someone who would have the most basic understanding of insider trading statutes, stated,  

“And with respect to Steve’s purchases of Goldman shares in December of 2008 and January of 2009, which have been the object of some attention lately, it is my view that these purchases did not violate any Federal Reserve statute, rule or policy.”

A viewpoint considerably different from the morally vacuous precincts of the NY Fed was voiced by Jerry Jordan, the former president of the Federal Reserve Bank of Cleveland.  Jordan spoke for many when he remarked, “It’s an outrage.  He (Friedman) needed to either resign from the Fed board or from Goldman and proceed to sell his stock.”  To anyone outside Wall Street, Friedman clearly took advantage of inside information to profit from his trade in Goldman stock.  (By May 2008, Friedman’s Goldman shares had already yielded over $3-million in profit.)  Nevertheless, charges were never brought against Friedman.  In Friedman’s defense, he almost certainly undertook what any securities lawyer must have recognized as trades of very dubious legality because he had no fear of ever being prosecuted by anyone at the NY Fed.  Not only was the inept Thomas Baxter general counsel, but the even more grotesquely feckless and incompetent Tim Geithner (#24) was president of the NY Fed.  In all likelihood, Friedman knew from the first that he had nothing to fear from weaklings like these two.

Additional Information:

See Steve Friedman (#22) for more information on how Friedman appeared to take advantage of inside information he was privy to.  See Tim Geithner (#24) for his decision to pay, in full, AIG’s creditors – a list that includes some of the largest, most sophisticated banks in the world – all of whom should have completely understood the risks they were taking by trading with AIG.  See Gary Gorton (#27) for the Ivy League professor who provided the brains behind AIG’s money squandering investments.