In not-news thats still news, the Fed loves Goldman Sachs, and fires people who dont. Segarra worked on her examination of Goldmans conflict-of-interest policies for nearly seven months. Her mandate was to determine whether Goldman had a comprehensive, firm-wide conflicts-of-interest policy as of Nov. 1, 2011. Segarra has records showing that there were at least 15 meetings on the topic. Silva or Kim attended the majority. At an impromptu gathering of regulators after one such meeting early that December, her contemporaneous notes indicate Silva was distressed by how Goldman was dealing with conflicts of interest. By the spring of 2012, Segarra believed her bosses agreed with her conclusion that Goldman did not have a policy sufficient to meet Fed guidance. During her examination, she regularly talked about her findings with fellow legal and compliance risk specialists from other banks. In April, they all came together for a vetting session to report conclusions about their respective institutions. After a brief presentation by Segarra, the team agreed that Goldmans conflict-of-interest policies didnt measure up, according to Segarra and one other examiner who was present. In May, members of the New York Fed team at Goldman met to discuss plans for their annual assessment of the bank. Segarra was sick and not present. Silva recounts in an email that he was considering informing Goldman that it did not have a policy when a business-line specialist interjected and said Goldman did have a conflict-of-interest policy – right on the banks website. In a follow-up email to Segarra, Silva wrote: In light of your repeated and adamant assertions that Goldman has no written conflicts of interest policy, you can understand why I was surprised to find a Conflicts of Interests Section in Goldmans Code of Conduct that seemed to me to define, prohibit and instruct employees what to do about it. But in Segarras view, the code fell far short of the Feds official guidance, which calls for a policy that encompasses the entire bank and provides a framework for assessing, controlling, measuring, monitoring and reporting conflicts. ProPublica sent a copy of Goldmans Code of Conduct to two legal and compliance experts familiar with the Feds guidance on the topic. Both did not want be quoted by name, either because they were not authorized by their employer or because they did not want to publicly criticize Goldman Sachs. Both have experience as bank examiners in the area of legal and compliance. Each said Goldmans Code of Conduct would not qualify as a firm-wide conflicts of interest policy as set out by the Feds guidance. In the recordings, Segarra asks Gwen Libstag, the executive at Goldman who is responsible for managing conflicts, whether the bank has a definition of a conflict of interest, what that is and what that means? No, Libstag replied at the meeting in April. Back in December, according to meeting minutes, a Goldman executive told Segarra and other regulators that Goldman did not have a single policy: Its probably more than one document – there is no one policy per se. Early in her examination, Segarra had asked for all the conflict-of-interest policies for each of Goldmans divisions as of Nov. 1, 2011. It took months and two requests, Segarra said, to get the documents. They arrived in March. According to the documents, two of the divisions state that the first policy dates to December 2011. The documents also indicate that policies for another division were incomplete. ProPublica and This American Life sent Goldman Sachs detailed questions about the banks conflict-of-interest policies, Segarra and events in the meetings she recorded. In a three-paragraph response, the bank said, Goldman Sachs has long had a comprehensive approach for addressing potential conflicts. It also cited Silvas email about the Code of Conduct in the statement, saying: To get a balanced view of her claims, you should read what her supervisor wrote after discovering that what she had said about Goldman was just plain wrong. Goldmans statement also said Segarra had unsuccessfully interviewed for jobs at Goldman three times. Segarra said that she recalls interviewing with the bank four times, but that it shouldnt be surprising. She has applied for jobs at most of the top banks on Wall Street multiple times over the course of her career, she said. The audio is muddy but the words are distinct. So is the tension. Segarra is in Silvas small office at Goldman Sachs with his deputy. The two are trying to persuade her to change her view about Goldmans conflicts policy. You have to come off the view that Goldman doesnt have any kind of conflict-of- interest policy, are the first words Silva says to her. Fed officials didnt believe her conclusion — that Goldman lacked a policy — was credible. Segarra tells him she has been writing bank compliance policies for a living since she graduated from law school in 1998. She has asked Goldman for the banks policies, and what they provided did not comply with Fed guidance. Im going to lose this entire case, Silva says, because of your fixation on whether they do or dont have a policy. Why cant we just say they have basic pieces of a policy but they have to dramatically improve it? Its not like Goldman doesnt know what an adequate policy contains, she says. They have proper policies in other areas. But cant we say they have a policy? Silva says, a question he asks repeatedly in various forms during the meeting.
Posted on: Sat, 27 Sep 2014 06:30:59 +0000
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