N.Y. Fed chairman resigns

NEW YORK, May 8 (UPI) -- The chairman of the Federal Reserve Bank of New York has resigned due to controversy over his role at Goldman Sachs Group Inc., his resignation letter said.

Stephen Friedman said he would resign effective immediately. Denis Hughes, deputy chair of the board, will take over the chairman's powers and duties, the bank said.

Friedman, a director and shareholder at Goldman Sachs, was granted a waiver of the conflict of interest policy that came into play when Goldman Sachs converted from an investment bank to a holding company in September, The Wall Street Journal reported Friday.

In his resignation letter, Friedman wrote that his dual roles were "being mischaracterized as improper." However, "the Federal Reserve System has important work to do and does not need this distraction," he wrote.

The Journal said while the waiver was under review Friedman bought 37,000 shares of Goldman Sachs. A Securities and Exchange Commission filing revealed he bought more shares the day after the waiver was granted in mid-January.

"With respect to Steve's purchases ... it is my view that these purchases did not violate any Federal Reserve statute, rule or policy," the New York Fed's attorney Thomas Baxter said.