Bank Above The Law? Carmen Segarra was a 13-year veteran of bank compliance work when she began her new job as a bank examiner with the New York Federal Reserve. A graduate of top universities who speaks four languages, news reports paint a picture of her as the kind of regulator we all want – independent, strong-willed, and unwilling to back down. She was tasked with monitoring Goldman Sachs from within.3 But in just a few months, she became unnerved by her Federal Reserve colleagues’ behavior, ranging from an unwillingness to challenge bank executives to pressuring her to change the minutes of meetings to cover up problematic statements. In one meeting early in her tenure, a Goldman executive said that once clients were wealthy enough, certain consumer laws didnt apply to them.”4 When Segarra tried to investigate, she faced protest from Fed colleagues who claimed the executive either did not say that, or did not mean it.5 Soon, Segarra began secretly recording her meetings - 46 hours in total. Caught on tape was a dispute over the terms of a Goldman Sachs financial deal that required the bank to get Federal Reserve approval, which it had not done. Instead of forcefully reprimanding the bank, Federal Reserve officials are heard on the recording meekly requesting documents at the end of a meeting, as if afraid of angering Goldman - even though it would have been a criminal offense for the bank to deny regulators the documents. But worse than any single allegation is the overall impression from the tapes that Federal Reserve regulators cared more about tamping down criticism and staying on friendly terms with the bank than doing their jobs on behalf of the American people. These tapes are some of the first tangible proof of what Wall Street critics have called “regulatory capture,” where the regulators prioritize friendships and future job opportunities -- and start serving the interests of the very institutions they are supposed to regulate. Tell Congress: Hold hearings on the Goldman Sachs tapes. Click here to sign the petition.
Posted on: Sun, 09 Nov 2014 19:10:04 +0000
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