The notion of conflict of interest seems to be going out of style. For starters, neither the New York Times nor former Attorney General John Ashcroft care very much about the concept:

You can say one thing for John Ashcroft: he’s not short on chutzpah.

In an op-ed in today’s New York Times, the former attorney general points out a thorny problem that the Justice Department may face as a result of the financial crisis: if there’s evidence that a company that has received significant amounts of bailout money committed fraud or other financial crimes, how do the Feds prosecute that company, while still protecting the health of the company on behalf of taxpayers?

The answer, according to Ashcroft: deferred prosecution agreements.

These deals, the former AG writes, offer “more appropriate methods of providing justice in the best interests of the public as well as a company’s employees and shareholders. They avoid the destructiveness of indictments and allow companies to remain in business while operating under the increased scrutiny of federally appointed monitors.”
[...]
… To argue for the idea, Ashcroft cites the example of a deferred prosecution agreement that DOJ reached in 2007 with nation’s five largest manufacturers of prosthetic hips and knees, accused of giving kickbacks to orthopedic surgeons who used their products. In the spirit of disclosure, he notes in parentheses: “I was a paid monitor for one of these companies, Zimmer Holdings.”

But those pithy parentheses don’t begin to make clear that making such deals more prevalent, as Ashcroft desires, would represent a potential financial boon for the ex-AG, who now runs the Ashcroft Group, a law and lobbying firm — assuming he intends to remain active in the deferred prosecution agreement business.

Ashcroft also doesn’t mention that he’s drawn intense criticism for the Zimmer gig. That’s because the man who awarded it to him — then US Attorney Chris Christie, (sic) was a subordinate of Ashcroft’s at DOJ. Ashcroft was reportedly given the job — said to be worth between $28 and 52 million to the Ashcroft Group, at Zimmer’s expense — with no public notice and no outside bidding.

After initially refusing to answer questions bout the deal last year, Ashcroft eventually testified before Congress about it. During that hearing in March 2008, Rep. Linda Sanchez (D-CA) declared that the contract appeared to be “a backroom, sweetheart deal.”

The Washington Post last year added some additional details about the payments:
Ashcroft and about a half-dozen senior staff members of his firm are covered under a flat $750,000 monthly payment from Zimmer. Other top lawyers affiliated with Ashcroft’s consulting business are billing as much as $895 per hour under the agreement, while administrative support staff members are billing $50 to $150 per hour, Senate aides said.

Bills submitted by monitors for the other four companies involved in the settlement are less than half of what the Ashcroft group has charged, averaging a total of about $2 million each, the aides said.
[...]
After having been slammed for the Christie deal, you’d hope that Ashcroft would think twice about publicly touting the benefits of such arrangements — especially without clearly disclosing that he could well benefit financially from their more widespread adoption. Guess not.

You’d also think the New York Times would want to give readers a bit more information about its writer’s financial stake in the issue he’s writing about. But then, we already know that the paper’s op-ed page doesn’t see disclosure as that big of a deal (sic), so maybe it’s not surprising.

Ashcroft managed to briefly attain sainthood as a result of the Fable of the Hospital Bed, but the feet of clay have always been gigantic in comparison to the brief, tenuous halo. And this op-ed incident, and its backstory, show Ashcroft at his sleazy, uncaring best.

Then there’s also the curiously uncaring attitude of New York Fed chairman Stephen Friedman to appearances of conflict of interest and impropriety:

The Federal Reserve Bank of New York shaped Washington’s response to the financial crisis late last year, which buoyed Goldman Sachs Group Inc. and other Wall Street firms. Goldman received speedy approval to become a bank holding company in September and a $10 billion capital injection soon after.

During that time, the New York Fed’s chairman, Stephen Friedman, sat on Goldman’s board and had a large holding in Goldman stock, which because of Goldman’s new status as a bank holding company was a violation of Federal Reserve policy.

The New York Fed asked for a waiver, which, after about 2 1/2 months, the Fed granted. While it was weighing the request, Mr. Friedman bought 37,300 more Goldman shares in December. They’ve since risen $1.7 million in value. (…)

Mr. Friedman, who once ran Goldman, says none of these events involved any conflicts. He says his job as chairman of the New York Fed isn’t a policy-making one, that he didn’t consider his purchases of more Goldman shares to conflict with Fed policy, and bought shares because they were very cheap.

He knew the fact that he owned shares in Goldman “was a violation of Federal Reserve policy” (because he had to apply for a waiver). If owning shares of Goldman was a violation, buying more shares of Goldman had to be a violation too. But it didn’t matter that it was, actually, a violation. All that mattered was that he decided he didn’t consider it to be a violation. That made it okay for him to buy more shares in December.

Could there be a more egregious example of “ha ha, the rules don’t apply to me!” arrogance? Of completely imperious indifference to situational optics? Friedman is clearly a man who is secure in the belief that in the time of Geithner and Summers, the Obama administration will never hold him accountable for such peccadilloes. (Long live transparency! Long live accountability! Long live the high ethical standards of the Obama administration!)

And it never once occurred to Friedman that the very fact that he was required to ask for a waiver meant there were real conflict of interest issues here? Since Friedman is determined to be disingenuous, someone needs to spell out the “large and obvious” conflict of interest in terms that a fourth grader would understand. Someone did:

Whatever Mr. Friedman might think, having a director of the New York Fed serving on the board of Goldman Sachs, and owning 98,600 shares of Goldman Sachs, became an obvious conflict of interest once Goldman became a bank holding company. The New York Fed regulates banks and bank holding companies headquartered in New York, New Jersey, and Fairfield County, Connecticut, and enforces laws governing them, in addition to doing various other things that can affect their share prices. Goldman Sachs is a bank holding company headquartered in New York. I’m not sure how a conflict of interest could be more obvious than that.

Moving from facts to speculation, why would someone in Friedman’s position make that questionable purchase of additional shares? Because “they were very cheap” hardly cuts it. There were presumably lots of other shares that looked very cheap to Friedman at the time, which would not have put him in conflict-of-interest and violation-of-Fed-policy hot water. Friedman once ran Goldman; presumably he still has an information pipeline into the firm. If he were acting on inside information, if he had reason to view that $1.7 million profit as a sure thing, that would explain a lot, wouldn’t it?

*** Update, 7:49 a.m. ***

While the New York Fed had no problems granting Friedman a waiver to hold shares of a bank holding company he’s responsible for regulating, other regional Feds don’t see that as kosher at all:

The 12 regional Federal Reserve banks have conflicting practices regarding directors who are board members of banks and own shares of bank-holding companies, heightening calls to overhaul the policies at these financial institutions.
[...]
This week, some other regional Fed banks, including Kansas City and Dallas, said they wouldn’t have allowed such a situation. And some banking executives criticized the actions of the New York Fed, which declined to comment on Tuesday but previously said it couldn’t afford to lose Mr. Friedman at such a critical time.

Ah, yes, the old “uniquely qualified” defense. Trotted out for Friedman presumably because it has been so strongly validated in Geithner’s case.

“It is the standing procedure of the Dallas Fed that Class C directors avoid any conflicts of interest, real or perceived,” said James Hoard, a spokesman for the Dallas regional bank, in a statement.

Kind of funny, isn’t it? At the Dallas Fed, they avoid any conflicts of interest, real or perceived. At the New York Fed, you can shrug off any real conflict of interest by declaring that you don’t perceive it as a conflict.

So why does Friedman get away with it, why is he so invulnerable to sanctions of any kind? The fact that he was chairman of the board of The Federal Reserve Bank of New York when Geithner was President certainly couldn’t have anything to do with it.

*** Update #2, 8:07 a.m. ***

In fact, other regional Feds consider it a violation of Fed policy to hold shares of a bank holding company even when you’re not responsible for regulating it.

Take John Marvin, Deputy Chairman of the Minneapolis Fed:

Mr. Marvin, the chairman and CEO of Marvin Windows & Doors in Warroad, Minn., found himself in violation of Fed policy in September when Goldman and Morgan Stanley were converted from securities firms into bank-holding companies.

Mr. Marvin and his family members held shares in both companies, said a Minneapolis Fed spokeswoman, stakes valued at well under $100,000. On Nov. 4, 2008, Minneapolis Fed officials asked the Federal Reserve Board in Washington for a waiver of the policy barring Class C directors from having such holdings, and the waiver was granted verbally on Jan. 26.

So, on the one hand there’s John Marvin, who finds himself with family holdings of shares worth less than $100,000 in two bank-holding companies he doesn’t even regulate, playing it by the book.

And then there’s Stephen Friedman, who airily declares that he sees no conflict of interest in owning several million dollars worth of shares in a bank-holding company he regulates, and then investing a couple of million dollars more in the company to make a multi-million dollar profit.