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Reports have surfaced from Wall Street about the relationship between the Federal Reserve Bank of New York and Goldman Sachs (NYSE: GS). Before we go into the relationship, let's take a look at what has taken place at GS thus far. Late last year, GS received rather quick approval to become a bank holding company and received an injection of $10 billion in capital soon after the approval. There is nothing suspicious about this relationship, until you learn that the New York Fed's chair Stephen Friedman was on GS's board at the time -- and held a large amount of GS stock. Flat out, this is a violation of the Fed's policy.
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