Journalism in the Public Interest

New Allegations from Fired Examiner Describe Chaotic Workplace at New York Fed

The Fed has denied allegations by Carmen Segarra, who says she was wrongly terminated after refusing to back off findings that were critical of Goldman Sachs.


Carmen Segarra outside of the Federal Reserve Bank of New York. (Nabil Rahman for ProPublica)

An amended lawsuit by fired bank examiner Carmen Segarra describes a chaotic work environment at her old employer, the Federal Reserve Bank of New York, alleging that lines of authority were unclear and bad behavior by a supervised bank went unexamined.

A spokeswoman for the New York Fed said the bank was reviewing the new allegations from Segarra, who was dismissed seven months after being hired in late 2011 as part of a push to beef up supervision of so-called Too-Big-to-Fail financial institutions.

Segarra claims she was terminated for refusing to change her finding that Goldman Sachs did not have appropriate policies for handling conflicts of interest in its business dealings. Her complaint alleges that the senior supervising officer for the Fed at Goldman, Michael Silva, and his deputy, Michael Koh, obstructed her examination of Goldman on several occasions.

Silva, who had worked at the New York Fed since 1992, left last month to take a job as the chief regulatory officer and compliance leader of GE Capital. That firm is one of the Too-Big-to-Fail financial institutions regulated by the New York Fed. Silva did not respond to a request for comment.

A Fed official said Silva’s departure had nothing to do with Segarra’s lawsuit, which was filed in October.

The New York Fed, which has jurisdiction over many of these complex firms, recruited experts like Segarra to act as “risk specialists” to review different aspects of bank operations. Segarra, an Ivy League-trained lawyer with work experience at some of the nation’s top banks, was tasked with examining the legal and compliance policies at Goldman.

Segarra’s lawsuit alleges that she was never given a complete job description and describes tensions that existed between Segarra and Fed staff embedded at Goldman who had previously performed aspects of her job. Some of the embedded staff, including Silva, did not agree with Segarra’s interpretations of Goldman’s activities regarding conflicts, according to the complaint.

In legal papers, the Federal Reserve has said Segarra was an at-will employee who was legally terminated. Goldman, which is not a defendant in Segarra’s lawsuit, has told ProPublica that it has the required conflict-of-interest policy.

Both Silva and Koh are named as defendants in the lawsuit along with the NY Fed. According to her complaint, their job was to “manage the relationship” between Goldman and the Fed, not to perform examinations.

While at the New York Fed, Segarra had a direct supervisor, Jonathon Kim, who oversaw legal and compliance specialist examiners stationed at several banks. According to the amended complaint, Kim, also a defendant, told Segarra that the Fed “had failed to clearly articulate the different roles of [the relationship managers] and bank examiners.”

When Segarra complained about the obstruction, the complaint says, Kim told her she needed to learn “the critical skills of ‘absorbing and diffusing.’”

“They allowed this lack of clarity to interfere with Carmen’s bank examining activity,” said Segarra’s attorney, Linda Steagle. “In fact we are saying that this amorphous structure exists, in large part, so they can do exactly that.”

The New York Fed’s website broadly describes how the supervisory structure is supposed to work. Oversight of large, complex institutions is "led by a senior supervisory officer" who leads "the development and execution of the supervisory program for the firm" and "is responsible for interactions with the board of directors and senior management."

Additionally, team specialists "interact directly with members of the firm's management across various business lines and control functions, including the control functions responsible for managing credit risk, market risk, liquidity risk, operational risk, and legal and compliance risk."

In an addition to the amended complaint, the parties this week filed a joint letter detailing a trial schedule that is expected to stretch into next year. The letter discloses that Segarra possesses "audio recordings of several meeting with defendants" and suggests that they might assist the Court if there are disputes over facts in the case.

The New York Fed is one of 12 regional reserve banks that form the Federal Reserve System. It is the largest such bank in terms of assets and volume of activity, according to its website. While the New York Fed is a private bank, the Federal Reserve’s Board of Governors in Washington, D.C., delegates a public regulatory function to it. 

Only in the US banking industry would oversight of a private bank be conducted by a totally privately owned institution with a misleading name, (Federal Reserve), of which the bank being investigated was an owner, (Goldman Sachs). How, in the name of all that is good and right, can that be allowed? Because so few folks even understand who owns the secretive Fed.
Shame on this country for not understanding the functions and relationships of the false idol on the alter at which in genuflects, (e.g - The Federal Reserve Note).
We teach French, but hide the truth of the organization and function of ‘Debt Money’, even in the well funded and glittering schools of business on the otherwise crumbling campuses of our previous bastions of knowledge, Universities.

Oh, I don’t like the way this story is going.  “Chaotic” sounds like the direction is now to find some lower-level patsy to take the blame while allowing the organization to skip the messy process of actually being responsible for the work done in its name.

Is the Fed at fault or are Silva and Koh rogues whose families will be provided for while they’re in jail…?

Stuart Riddle

Dec. 6, 2013, 5:12 p.m.

I have watched this skirmish develop.  I hope the Times keeps on a front page.
Camen has caught the Fed in a do-nothing word-play, so Goldman can romp along, conducting business as usual, while, because they were made into a “bank,” we the taxpayers must back their folly.
Bad deal!

Who are the stock holders of the private federal reserve bank of new york?...where is it verifiable ....recorded incorporation filings?  How might a citizen start to learn of the private control of ” united states currency” , which I thought was granted only to the people (us govt) , by constitution…is there an amendment out there we should be aware of?

A less naive db

Dec. 7, 2013, 2:18 a.m.

Neil Barofsky named it pretty well in his book Bailout.  There is a bipartisan sell out of the American people by the five money center banks that compose the ‘Fed’ which has commandeered the treasury.
Those banks are calling the shots on who lasts, and who does not.. look at oil vs solar for example.  One can see it is not intelligence that is ruling, but the weight of history.

Yet this is a press test.  Kudos to propublica.  This story ought to have legs, but it will only if we have a functional press.  Can the commercial press cover corruption when it depends on commercials to support itself?

‘No’ is the logical answer to that one.  Human beings who identify as citizens, not consumers, must support a truth telling press.  Only with many pointed funding can truth be told to power.  Citizen, I invite you to support pro publica, and also Glenn Greenwald’s new venture… with more than your eyeballs… with your coin as well.  Our press needs staying power.  That is in your hands.


A less naive db

Dec. 7, 2013, 7:13 p.m.

Yes,  it is a Jungle out there, and I will believe in your banana if you believe in mine…...  or are we talking lollipops? *

I am mystified at what we call civilization.  I looked it up etymologically.  It’s root is couch.    What is it to be civilized?  No pun intended but all we seem to model today is See- Evil- ization.

What was Benjamin Franklin thinking when he said, “We all had better hang together, otherwise we will hang separately.”    What was he thinking?  and can we remember….. or figure it out?

He was big on paper money, but collectively owned… not like the Jamie Dimon dollars we have today.  A few among us just make money up.  I guess that brings us back to corruption….. and the courage of Carmen.

Thank you Carmen.

* a sweet sucker.

Recordings? Wonderful!! it is high time the criminal organization known as The Fed was pried open and examined. Maybe this young lady will be inspired by Mr. Snowden and spill the beans! Of course you won’t hear about this in mainstream Amerikan news. Just have to wait for Odemyer and Greenwald’s publication to come out for the dirty details of all that is wrong in the criminal US government.

Ah the joys of Capitalism. The fun never ends. It’s like watching a dog chase its tail.

Info about the Federal Reserve and it’s “ownership” here. It does help to be an informed citizen, not just a commenter. and conspiracy theory junkie. On the other hand, what if the website is lying? Ooooooh. (Twilight music here.)

Yeah, let’s support Glenn Greenwald’s new venture financed by a PayPal founder, which was recently outed as having deep ties to the NSA, now that GG (and fellow venture-partner Poitras) are the sole possessors of the Snowden docs, resulting in book and movie deals worth millions, while we have yet to see even 1% of what Snowden gave him. Yeah. You go support that.

Demeter owner of ebay&Paypa;$ friends with BO.
Lot of scams on ebay&Paypa;$pal with chargebacks. AG’s of all states know of these scams.
Holder no action.
Greenwald hired away from Guarden to Odemeyers new paper in Hawaii.
Greenwald $bagman for Snowman’s info. Probably intercepted info on birth issue and coverup, many other conversations with Odemyer.
Fix is in. Snowman will probably fly back on AF one with BO from trip to games w Pukin blessing for share of fix $ on buy bak of info from Snowman.
Peel the onion.

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