46 hours of secret recordings from inside the Federal Reserve will soon rock Wall Street.
by Jerry Robinson
In the fall of 2011, Carmen Segarra landed a job as a bank examiner at the New York Fed.
Upon being hired, Ms. Segarra was assigned to examine Goldman Sachs. In particular, she was tasked with determining whether the bank’s conflict-of-interest program was in compliance with current Federal Reserve guidelines. (The Fed’s guidelines require the bank to ensure its relationship with one client does not conflict with another client.) Pretty straight forward stuff.
Ms. Segarra was soon staring into the belly of the beast and was astonished by her findings.
In fact, she claims the lack of Federal Reserve oversight was so egregious that she secretly recorded incriminating conversations deep inside the Federal Reserve Bank of New York.
But what happened next is now at the center of an epic legal battle that pits Ms. Segarra against some of the most powerful forces on Wall Street.
Upon concluding the investigation, Ms. Segarra’s findings were considered at a meeting at the Federal Reserve Bank of New York.
According to NYTimes/DealBook:
“At a March 2012 meeting, a group of examiners at the Federal Reserve Bank of New York agreed that Goldman Sachs had inadequate procedures to guard against conflicts of interest — guidelines aimed at stopping firms from putting their pursuit of profit ahead of their clients’ best interests.
The examiners voted to downgrade a confidential rating assigned by the New York Fed that could have spurred costly enforcement actions and other regulatory penalties. It is not known whether the vote in fact led to a rating change. The former examiner who pushed for a downgrade, Carmen M. Segarra, now contends in a lawsuit filed on Thursday that just weeks after the vote, her superiors asked her to change her findings on Goldman and fired her after she refused.”
The New York Times even weighed in on their own story, stating:
The lawsuit, along with a review by The New York Times of confidential government documents and internal e-mails, raises questions about the success of Goldman’s efforts to police potential conflicts.
