Podcast: Lawsuit Calls Into Question NY Fed’s Bank Supervision
After the financial crisis, Congress increased the Federal Reserve Bank of New York’s oversight responsibility, particularly for the so-called “Too Big To Fail” financial institutions. As part of these measures, the Fed ramped up hiring of specialized examiners, one of whom was Carmen Segarra. She was assigned to examine compliance programs at Goldman Sachs and quickly uncovered problems with its conflict of interest policy. Segarra alleges that her superiors pressured her to falsify her findings and when she refused, she was immediately fired. She’s now suing for wrongful termination.
ProPublica’s Jake Bernstein and Steve Engelberg join the podcast this week to discuss Segarra’s lawsuit, previous instances of conflict of interest at Goldman, and the wider implications of the case:
“The idea that the Fed is not on top of issues that could actually lead to these financial institutions weakening or becoming problems is a big deal and should worry everybody because we all remember what happened with the financial crisis and what an impact that had,” Bernstein says. “Congress gave the Fed more responsibility to supervise these banks and this calls into question how well they’re doing that.”