Journalism in the Public Interest

NY Fed Fired Examiner Who Took on Goldman

Lawyer Carmen Segarra said she was pressured to change her finding that the way Goldman Sachs managed conflicts of interest was flawed.

Carmen Segarra outside the Federal Reserve Bank of New York, on Oct. 10, 2013. In a wrongful termination lawsuit, Segarra says she was fired by the Fed after she refused to change a finding Goldman Sachs had inadequate controls over conflicts of interest. (Nabil Rahman for ProPublica)

A version of this story was co-published with The Washington Post.

In the spring of 2012, a senior examiner with the Federal Reserve Bank of New York determined that Goldman Sachs had a problem.

Under a Fed mandate, the investment banking behemoth was expected to have a company-wide policy to address conflicts of interest in how its phalanxes of dealmakers handled clients. Although Goldman had a patchwork of policies, the examiner concluded that they fell short of the Fed’s requirements.

That finding by the examiner, Carmen Segarra, potentially had serious implications for Goldman, which was already under fire for advising clients on both sides of several multibillion-dollar deals and allegedly putting the bank’s own interests above those of its customers. It could have led to closer scrutiny of Goldman by regulators or changes to its business practices.

Before she could formalize her findings, Segarra said, the senior New York Fed official who oversees Goldman pressured her to change them. When she refused, Segarra said she was called to a meeting where her bosses told her they no longer trusted her judgment. Her phone was confiscated, and security officers marched her out of the Fed’s fortress-like building in lower Manhattan, just 7 months after being hired.

“They wanted me to falsify my findings,” Segarra said in a recent interview, “and when I wouldn’t, they fired me.”

Today, Segarra filed a wrongful termination lawsuit against the New York Fed in federal court in Manhattan seeking reinstatement and damages. The case provides a detailed look at a key aspect of the post-2008 financial reforms: The work of Fed bank examiners sent to scrutinize the nation’s “Too Big to Fail” institutions.

In hours of interviews with ProPublica, the 41-year-old lawyer gave a detailed account of the events that preceded her dismissal and provided numerous documents, meeting minutes and contemporaneous notes that support her claims. Rarely do outsiders get such a candid view of the Fed’s internal operations.

Segarra is an expert in legal and regulatory compliance whose previous work included jobs at Citigroup and the French bank Société Générale. She was part of a wave of new examiners hired by the New York Fed to monitor systemically important banks after passage in July 2010 of the Dodd-Frank regulatory overhaul, which gave the Fed new oversight responsibilities.

Goldman is known for having close ties with the New York Fed, its primary regulator. The current president of the New York Fed, William Dudley, is a former Goldman partner. One of his New York Fed predecessors, E. Gerald Corrigan, is currently a top executive at Goldman. At the time of Segarra’s firing, Stephen Friedman, a former chairman of the New York Fed, was head of the risk committee for Goldman’s board of directors.

In an email, spokesman Jack Gutt said the New York Fed could not respond to detailed questions out of privacy considerations and because supervisory matters  are confidential. Gutt said the Fed provides “multiple venues and layers of recourse for employees to freely express concerns about the institutions it supervises.”

“Such concerns are treated seriously and investigated appropriately with a high degree of independence,” he said. “Personnel decisions at the New York Fed are based exclusively on individual job performance and are subject to thorough review. We categorically reject any suggestions to the contrary.”

Dudley would not have been involved in the firing, although he might have been informed after the fact, according to a Fed spokesman.

Goldman also declined to respond to detailed questions about Segarra. A spokesman said the bank cannot discuss confidential supervisory matters. He said Goldman “has a comprehensive approach to addressing conflicts through firm-wide and divisional policies and infrastructure” and pointed to a bank document that says Goldman took recent steps to improve management of conflicts.

Segarra’s termination has not been made public before now. She was specifically assigned to assess Goldman’s conflict-of-interest policies and took a close look at several deals, including a 2012 merger between two energy companies: El Paso Corp. and Kinder Morgan. Goldman had a $4 billion stake in Kinder Morgan while also advising El Paso on the $23 billion deal.

Segarra said she discovered previously unreported deficiencies in Goldman’s efforts to deal with its conflicts, which were also criticized by the judge presiding over a shareholder lawsuit concerning the merger.

Her lawsuit also alleges that she uncovered evidence that Goldman falsely claimed that the New York Fed had signed off on a transaction with Santander, the Spanish bank, when it had not. A supervisor ordered her not to discuss the Santander matter, the lawsuit says, allegedly telling Segarra it was “for your protection.”

‘Eyes Like Saucers’

The New York Fed is one of 12 regional quasi-private reserve banks. By virtue of its location, it supervises some of the nation’s most complex and important financial institutions. After the 2008 financial crisis, disparate voices pointed to failures of enforcement by the New York Fed as a key reason banks took on too much risk.

Even Fed officials acknowledged shortcomings. After Dodd-Frank, new examiners like Segarra, called "risk specialists," were hired for their expertise. They were in addition to other Fed staffers, dubbed "business line specialists," some of whom were already embedded at the banks.

Segarra believed she had found the perfect home when she joined the New York Fed's legal and compliance risk specialist team in October 2011. It was a prestigious job, insulated from business cycles, where she could do her part to prevent another financial meltdown. Her skills, honed at Harvard, Cornell Law School and the banks where she had worked, consisted of helping to create the policies and procedures needed to meet government financial regulations.

As part of their first assignment, Fed officials told Segarra's group of risk specialists to examine how the banks in which they were stationed complied with a Fed Supervision and Regulation Letter issued in 2008.

The letter, known as SR 08-08, emphasizes the importance of having company-wide programs to manage risks at firms like Goldman, which engage in diverse lines of business, from private wealth management and trading to mergers and acquisitions. The programs are supposed to be monitored and tested by bank compliance employees to make sure they are working as intended.

“The Fed recognized that financial conglomerates should act like truly combined entities rather than separate divisions or entities where one group has no idea what the other group is doing,” said Christopher Laursen, an economic consultant and former Federal Reserve employee who helped draft the supervisory letter.

In 2009, a review by the Fed had found problems with its efforts to ensure that banks followed the policy, which also says that bank compliance staffers must “be appropriately independent of the business lines” they oversee.

Segarra’s team included examiners placed at nine other “Too Big to Fail” banks, including Citigroup, JPMorgan Chase, Deutsche Bank and Barclays.

Segarra said her bosses told her to focus on Goldman’s conflict-of-interest policies. The firm had long been famous for trying to corral business from every part of the deals it worked on. “If you have a conflict, we have an interest,” is an oft-told joke on Wall Street about the firm’s approach.

The year before Segarra joined the Fed, for instance, Goldman had received a drubbing from the Securities and Exchange Commission and a Senate subcommittee over conflicts related to Abacus, a mortgage transaction the bank constructed. The SEC imposed a $550 million fine on the bank for the deal. A January 2011 Goldman report concluded that the firm should "review and update conflicts-related policies and procedures, as appropriate."

Initial meetings between the New York Fed and Goldman executives to review the bank’s policies did not go well, said Segarra, who kept detailed minutes.

When the examiners asked in November 2011 to see the conflict-of-interest policy, they were told one didn’t exist, according to the minutes. “It’s probably more than one document — there is no one policy per se,” the minutes recount one Goldman executive as saying.

The discussion turned to the name of the group that oversaw conflicts at Goldman: “Business Selection and Conflicts Resolution Group.” Segarra’s supervisor, Johnathon Kim, asked if business selection and conflicts were, in fact, two different groups. He was told they were not, the minutes show.

Goldman officials stated that the bank did not have a company-wide conflict-of-interest program, Segarra’s minutes show. Moreover, the head of the business selection and conflicts group, Gwen Libstag, who is not a lawyer, said in a subsequent meeting on Dec. 8 that she did not consider what her staff did a “legal and compliance function,” according to Segarra’s minutes.

“That’s why it’s called business selection,” another Goldman executive added. “They do both.”

Given the Fed’s requirements, the regulators were stunned, Segarra recounted in an interview. “Our eyes were open like saucers,” she said. “Business selection is about how you get the deal done. Conflicts of interest acknowledge that there are deals you cannot do.”

After the Dec. 8 meeting, the New York Fed’s senior supervising officer at Goldman, Michael Silva, called an impromptu session with Fed staffers, including Segarra. Silva said he was worried that Goldman was not managing conflicts well and that if the extent of the problem became public, clients might abandon the firm and cause serious financial damage, according to Segarra’s contemporaneous notes.

A Chinese Wall In Their Heads

As part of her examination, Segarra began making document requests. The goal was to determine what policies Goldman had in place and to see how they functioned in Kinder Morgan’s acquisition of El Paso. The merger was in the news after some El Paso shareholders filed a lawsuit claiming they weren’t getting a fair deal.

Although Segarra reported directly to Kim, she also had to keep Silva abreast of her examinations. Silva, who is also a lawyer, had been at the Fed for 20 years and previously had served as a senior vice president and chief of staff for Timothy Geithner while he was New York Fed president. As a senior vice president and senior supervisor, Silva outranked Kim in the Fed hierarchy.

Segarra said James Bergin, then head of the New York Fed’s legal and compliance examiners, noted at a November meeting that there was tension between the new risk specialists and old-guard supervisors at the banks. Segarra said the tension surfaced when she was approached in late December by a Fed business line specialist for Goldman, who wanted to change Segarra’s Dec. 8 meeting minutes.

Segarra told her Fed colleague that she could send any changes to her. When Segarra next met with her fellow risk specialists, she said she told them what had transpired. They told her that nobody should be allowed to change her meeting minutes because they were the evidence for her examination.

Around that time, Silva had a meeting with Segarra, she said. According to her notes, Silva warned her that sometimes new examiners didn’t recognize how they are perceived and that those who are taken most seriously are the most quiet. Segarra took it as more evidence of tension between the two groups of regulators.

Bergin, Silva and Kim did not respond to requests for comment.

By mid-March 2012, Goldman had given Segarra and a fellow examiner from the New York State Banking Department documents and written answers to their detailed questions. Some of the material concerned the El Paso-Kinder Morgan deal.

Segarra and other examiners had been pressing Goldman for details about the merger for months. But it was from news reports about the shareholder lawsuit that they learned the lead Goldman banker representing El Paso, Steve Daniel, also had a $340,000 personal investment in Kinder Morgan, Segarra said.

Delaware Chancery Court Judge Leo Strine had issued a 34-page opinion in the case, which eventually settled. The opinion castigated both El Paso’s leadership and Goldman for their poor handling of multiple conflicts of interest.

At the New York Fed, Goldman told the regulators that its conflict-of-interest procedures had worked well on the deal. Executives said they had “exhaustively” briefed the El Paso board of directors about Goldman’s conflicts, according to Segarra’s meeting minutes.

Yet when Segarra asked to see all board presentations involving conflicts of interest and the merger, Goldman responded that its Business Selection and Conflict Resolution Group “as a general matter” did not confer with Goldman’s board. The bank’s responses to her document requests offered no information from presentations to the El Paso board discussing conflicts, even though lawsuit filings indicate such discussions occurred.

Goldman did provide documents detailing how it had divided its El Paso and Kinder Morgan bankers into “red and blue teams.” These teams were told they could not communicate with each other — what the industry calls a “Chinese Wall” — to prevent sharing information that could unduly benefit one party.

Segarra said Goldman seating charts showed that that in one case, opposing team members had adjacent offices. She also determined that three of the El Paso team members had previously worked for Kinder Morgan in key areas.

“They would have needed a Chinese Wall in their head,” Segarra said.

Pressure To Change Findings

According to Segarra’s lawsuit, Goldman executives acknowledged on multiple occasions that the bank did not have a firm-wide conflict-of-interest policy.

Instead, they provided copies of policies and procedures for some of the bank’s divisions. For those that did not have a division-wide policy, such as the investment management division, they offered what was available. The policy for the private banking group stated that employees shouldn’t write down their conflicts in “emails or written communications.”

“Don’t put that in an email in case we get caught?” Segarra said in an interview. “That’s a joke.”

Segarra said all the policies were missing components required by the Fed.

On March 21, 2012, Segarra presented her conclusion that Goldman lacked an acceptable conflict-of-interest policy to her group of risk specialists from the other “Too Big to Fail” banks. They agreed with her findings, according to Segarra and another examiner who was present and has requested anonymity.

Segarra’s group discussed possible sanctions against the bank, but the final decision was up to their bosses. A summary sheet from the meeting recommended downgrading Goldman from “satisfactory” to “fair” for its policies and procedures, the equivalent of a “C” in a letter grade.

A week later, Segarra presented her findings to Silva and his deputy, Michael Koh, and they didn’t object, she said. Reached by ProPublica, Koh declined to comment.

In April, Goldman assembled some of its senior executives for a meeting with regulators to discuss issues raised by documents it had provided. Segarra said she asked Silva to invite officials from the SEC, because of what she had learned about the El Paso-Kinder Morgan merger, which was awaiting approval by other government agencies.

Segarra said she and a fellow examiner from New York state’s banking department had prepared 65 questions. But before the meeting, Silva told her she could only ask questions that did not concern the El Paso-Kinder Morgan merger, she said.

Nonetheless, SEC officials brought it up. Goldman executives said they had no process to check the personal holdings of bankers like Steve Daniel for possible conflicts, according to notes Segarra took at the time. Asked by Segarra for Goldman’s definition of “conflicts,” the bank’s general counsel, Greg Palm, responded that it could be found in the dictionary, she said.

“What they should have is an easy A-B-C approach to how to manage conflicts,” Segarra said. “But they couldn’t even articulate what was a conflict of interest.”

Goldman declined a request to make Palm available for comment.

As the Goldman examination moved up the Fed’s supervisory chain, Segarra said she began to get pushback. According to her lawsuit, a colleague told Segarra in May that Silva was considering taking the position that Goldman had an acceptable firm-wide conflict-of-interest policy.

Segarra quickly sent an email to her bosses reminding them that wasn’t the case and that her team of risk specialists was preparing enforcement recommendations.

In response, Kim sent an email saying Segarra was trying to “front-run the supervisory process.” Two days later, a longer email arrived from Silva, stating that “repeated statements that you have made to me that [Goldman] does not have a [conflict-of-interest] policy AT ALL are debatable at best, or alternatively, plainly incorrect.”

As evidence, Silva cited the 2011 Goldman report that called for a revamp of its conflict-of-interest procedures, as well as the company’s code of conduct — neither of which Segarra believed met the Fed’s requirements.

While not commenting on Goldman’s situation, Laursen, the consultant who helped draft the Fed policy, said the idea is to police conflicts across divisions. “It would need to be a high-level or firm-wide policy,” he said, that “would identify the types of things that should not occur and the processes and monitoring that make sure they don’t.”

In its email to ProPublica, Goldman cited a May report from its Business Standards Committee that says the company completed an overhaul of its business practices earlier this year that included new policies and training for managing conflicts.

Before Segarra could respond to Silva’s email, Koh summoned her to a meeting. For more than 30 minutes, he and Silva insistently repeated that they did not agree with her findings concerning Goldman, she said.

Segarra detailed all the evidence that supported her conclusion, she said. She offered to participate in a wider meeting with New York Fed personnel to discuss it further. Because Fed officials would ultimately have to ratify her conclusions, she let them know she understood that her findings were subject to change.

Silva and his deputy did not engage with her arguments during the meeting. Instead, they kept reiterating that she was wrong and should change her conclusions, she said.

Afterward, Segarra said she sent an email to Silva detailing why she believed her findings were correct and stating that she could not change them. There was just too much evidence to the contrary, she said in an interview.

Three business days later, Segarra was fired.

Segarra has no evidence that Goldman was involved. Silva told her that the Fed had lost confidence in her ability to follow directions and not jump to conclusions.

Today, Segarra works at another financial institution at a lower level than she feels her qualifications merit. She worries about the New York Fed’s ability to stop the next financial crisis.

“I was just documenting what Goldman was doing,” she said. “If I was not able to push through something that obvious, the Federal Reserve Bank of New York certainly won’t be capable of supervising banks when even more serious issues arise.”

ProPublica research director Liz Day contributed to this story.

This is outrageous!

Permit me a sexist comment:
She should be a movie star.

Stephanie Palmer

Oct. 10, 2013, 3:22 p.m.

Oh, I can hardly wait to see their butts in court. Let’s hope that this time, we really get to look into their nefarious business practices. It’s about time. God knows, they’ve sucked more money out of our economy and left us with little savings and assets. The heck with those snakes.

eddie stinson

Oct. 10, 2013, 3:31 p.m.

Seeing the revolving door of Fed executives, is it any wonder other government agency’s rulings are so slanted toward the companies they investigate?

The American public has little chance.

Dare I point out, yet again, it is a woman standing up for justice and ethics? I applaud this woman!

Hermann Helmholtz

Oct. 10, 2013, 3:49 p.m.

What one should be concerned about is not only Ms.Segarra, but the hundred or thousands of “Senior Examiners” who towed the line and changed their findings, and those who didn’t and did not pursue the matter afterwards. 

I was amazed when the nominated Chairman of the Federal Reserve Bank, Ms. Yellen, spoke from the presidential podium yesterday about the role of the Fed Chairman in “serving the people.”

The Fed is established to guide the economy and facilitate stable prices and continued profits. Its main policy is to play with the unemployment figure to restrict demand or expand it.

The rule of thumb is that unemployment should not be below or above 6.5%, and various ploys are used to achieve this balance - since the days of Keynes.

We can therefore, safely assume that any moment of time, some 18 million Americans are excluded from the “people” thing!

Of course, today say in California, some 30 million are so excluded, according to the government figures. These are regularly messaged to dull the sensibilities of those who are working and are a part of the “people” at this point in time.

This suggests that the Fed’s policy is to maintain unemployment. And to do so, corporations are therefore encouraged to fire their employees if the employment figure reached, say, 6% - by raising the prime rate.

Such firing has no bearing on efficiency, performance or need of the employee. It is a sacrifice that a loyal US citizen have, in all probability, never heard of, and if he or she did, he can “drink the sea.”

Now speak to me about “equal opportunity.”


What is ironic is that the figure of 6.5% was sometime ago 5%, and before 4.2%.

Peter Anderson

Oct. 10, 2013, 3:51 p.m.

Great story. Let’s hope it gets picked up everywhere. Well done.

Is there anyone you can you when those who are supposed to protect the public trust fail us?  Really shameful that the Fed Reserve personnel is so complicitly intertwined with the targets of their investigations.  Maybe NY State A.G. Schneiderman will step in and run a real investigation. Shame on them all.  I applaud Ms. Segarra.  She is very courageous and certainly has a long and difficult path ahead of her.  Thanks for shining a spotlight on this story.  I’m afraid the roaches will scurry and briefly hide but will never disappear.

For starters, let’s fire her bosses at the Fed.

I’m listening, but haven’t heard Darrell Issa announcing a congressional investigation.

Robert Hefley

Oct. 10, 2013, 4:45 p.m.

Awesome reporting. Sure makes me worry that another collapse is on the horizon. Sociopathy and thievery run rampant. And the business sector throws a fit over any suggestion that regulation is needed.

In the violent movie “Killing Them Softly”, the Brad Pitt character pretty well summarized the Goldman philosophy in his closing comment: “America is not a country, it’s a business. Now where’s my money ?”

Such is life in an ethics-free environment.

Well, there goes the NY Fed’s claims of freedom from conflict of interest.  Of course, everyone knows the folks who ran Goldman Sachs are too important to fail.

Given that this article raises the possibility (probability) that our enforcement of extant regulations is systematically lacking, I am skeptical of the merits of any further regulation.

How are internal housecleanings of the Fed and its arms to be accomplished? Likewise for Federal agencies, where the people, at least indirectly, have influence?

Morris Foutch

Oct. 10, 2013, 6:20 p.m.

Bill Dudley is current chair of the NYFed; he must resign and make this woman whole again. This is a shameful episode and very well may point to a massive evasion of the Dodd-Frank statutes. I dont know how you dump a chair person of this magnitude but Mr. Dudley can certainly be accused of the same act that went down in 2008: Failure to supervise. His connections to GS are just too, too obvious now.

The idiom is “toe the line,” not “tow the line”.

If you ever went to boot camp, you would know it’s “toe the line”.

You line up with your toes on the yellow line.

Thanks ProPublica and the Washington Post!! A definite smoking gun! Now if only this carefully documented subversion of the Fed’s purpose would go mainstream instead of being circulated, as usual, only among those of us who care enough to keep ourselves informed.

This kind of stuff is the tip of the ICEBERG and must be stopped since it hurts the entire country and global economy.

Obviously outrageous conduct by senior NY Fed officials. Now the question is will the courts force the Fed to fix the problem and make Ms Segarra whole.

I guess we now know how ex NJ Governor and Goldman co-Chairman, Jon Corzine was able to walk away from the his theft of $200m to $1.2bn of client money at MF Global. Although I suspect we (and the Fed’s) already knew.

Scary!  Halloween must be coming.

Frank Martinez

Oct. 11, 2013, 3:55 a.m.

The rarest of all commodities- integrity.
Scarcity is supposed to translate to higher value.  This brave woman should be not only applauded but also protected. She has taken on Goliath- let all of us who recognize her courage make it a point to support her in any manner possible.
Is there a fund or website where we can tangibly demonstrate we have her back?
Bravisimo !

Wall Street is nothing but a “SUPER Ponzi Scheme” with all the cover provided by the privately owned - Federal Reserve and the US Congress.

So, when you have Trillions of dollars to manipulate and extract your “piece of the action” from, it’s really easy to buy ALL the people off along the chain of command. Except, the do-gooders!

Here is a woman, a very intelligent woman who is trying to do her job, which is to protect the American Public from the likes of “proven illegal” financial practices of Goldman-“Money” Sachs. Her problem was, she actually believed that her job was to do challenge the business practices of financial companies like the Goldman’s of the financial world….wrong!

So, her run-in with her bought-off financial regulator bosses PROVES beyond a shadow of a doubt….no one on Wall Street goes to jail unless a “sacrificial lamb” is needed to make it look like the Fed Regulators are actually doing something in the Public’s financial interest.

So if you work in the financial sectors of the World beware - finding or challenging business practices of trillion dollar “Ponzi scheme” business modeled investment companies will give you…a very short career! No one likes do-gooders around when they are trying to steal everyone’s retirement money…I mean really!

How dare she to question the motives of those doing Gods work! 

Does she not know that Goldman has above reproach and must be worshipped above all other financial deities?

Baa baa


This issue begs the question: Why is a private bank being “regulated” by another private banking cartel (the FED) And why would anyone in the right mind believe that such “regulation” would in any way shape or form reflect or protect the public interest?

The Rothschild clan owns Goldman Sachs AND the ‘Federal Reserve’ private central bank. They’ve swindled the American people for the last 100+ years. This is nothing new. The only thing that’s new is the internet exposing these rat-faced basterds.
They own the judges, they own the Congress, and they own the puppet-Prez. And they own the media. So, uh, where do we start….?! Maybe we should just ask them to stop?
Or are more extreme measures in order? Read up on Eustace Mullins’ history of the banksters, or Andrew Jackson’s feud with Rothschild agent Nicholas Biddle. This has been a long term heist folks, and they play for keeps. It’s time to take back our destiny, as Americans.

The moneychangers hang together pretty well.

Welcome to America! Home of the thief, land of the slave.

Carmen Segarra for Chairman of the Federal Reserve!

Might I add, sexiest bank examiner ever? Ok. That is all. Seriously though Carmen, call me…

Richard Arnold

Oct. 11, 2013, 4:24 p.m.

A job for the NY State AG. No in the Fed establishment is going to touch this!

It should be the policy going forward that if your worked at GS, you cannot work for the Fed in any Management or Supervisory capacity. The conflict of interest is appalling.

Unfortunately, kudos to Ms. Segarra won’t fix her broken career. Let’s hope she prevails in her suit.

Ever watch The Shawshank Redemption (Tim Robbins, Morgan Freeman)?  The part, in particular, discussing how being imprisoned over long terms leads a prisoner to become “institutionalized” - to become unable to survive without the environment a prison provides?

One can become “institutionalized” in environments other than prisons…can come to believe that what is done in a particular environment is a…no, the way of life.  And behavior traits - like corruption - can be “institutionalized” into the way of life of entities…organizations of human beings.

People don’t look far enough back when they think about just when “high finance” in America became corrupt…when the players in “high finance” began to expect themselves to be corrupt, and began to expect all others to be corrupt, too, or they would spit them out like watermelon seeds.

Deregulation could never have happened if corruption had not already been rampant in both “high finance” and large parts of the legal framework designed to protect the American people - and America herself - from the rise of corruption in “high finance” to a position of supremacy (ethically- and morally-speaking).

Even Republicans and neoliberals - as arrogant as they are about assuming their desires for themselves and America take priority over the will, prosperity, and liberty of the American people - would never have dared to attempt to attempt to destroy the framework that protected the American people and America from a corrupt “high finance” if they had had any reason to suspect that entities like the Fed and SEC would rise in horror to protest the institutionalization of corruption in “high finance” and its regulatory bodies…

To the statement

Deregulation could never have happened if corruption had not already been rampant in both “high finance” and large parts of the legal framework designed to protect the American people - and America herself - from the rise of corruption in “high finance” to a position of supremacy (ethically- and morally-speaking).


And, obviously, among the politicians who name themselves or act as Republicans and neoliberals.

It takes tools even to destroy.

Robert N. Frost

Oct. 11, 2013, 7:14 p.m.

So, with all this justifiable anger, where do we go?

One has almost given up waiting for a Carmen Segarra Movement. Like the NSA crisis, it will be folded by other spectacular moves, like “invading Syria,” and life (and massive corruption) goes on while we scream altruistic “Baa’ Baa’ “

You want a sample? See the convoluted report today in the New York Times Business Section. You would think that what Ms. Segarra uncovered is a minor scratch on the front door of Goldman Sachs.

We may have a corrupt government and financial institutions - but we do have the most efficient “engineers” of public opinion!

The polls…the ones you vote in.

Not really going to change anything until a) we make it illegal to use media under FCC jurisdiction to lie to the American people, b) we make Citizens United an abomination of the past with campaign finance reform legislation, and c) we make politicians who decide which of their constituents to represent based upon how much wealth that constituent possesses members of GenPop in Federal prisons.

That means working to bring the truth to the American people not just during the run-up to our elections but day in and day out…

A hard slog, given the corruption of so very many talking heads (and so the news rooms some of them control) and corporate-owned media sources, but one that must be undertaken.  To borrow the only useful thing Boehner (R-OH) has ever said, “This isn’t some damned game.”.

This is a war, and the stakes are the lives of the children of America.

Wow, the Fed is behind the 8 ball now. Her bosses are not and were not doing their jobs. I wonder if they were rewarded by Goldman for the fraud they perpetrated on this woman and the whole process. I hope it all comes out in court and these guys are fired and perhaps charged criminally, although it is difficult to believe the US Department of “Injustice” will do their duty in this matter .

This lady should grab as much attention and limelight that she can.Try to stay in the public eye as Sibel Edmonds did.US is now no better than any other 3rd world cesspool.I pray for her safety.

Dina J. Padilla

Oct. 12, 2013, 9:08 p.m.

When this can happen to to this woman, then it just affirms that our governmental system is just rigged, local, state & federal, where ever they learned to rig it. What use to happen in some neighborhoods in some cities is now business as usual. If the big thieves get away it with all, then how can anyone else be charged or punished for similar crimes and this leaves the most dangerous precedent that there is no such thing as justice in our country.
I still have the presence of mind though that good wins over evil at some point because it all never stays the same, that at some point the pendulum will starting swinging the other way and at real justice will prevail.

I find it incredible that someone who is a 41-year old lawyer with an Ivy League background, and has worked extensively at banks to sound shocked by the deeply entrenched business practices in the financial industry.

Segarra speaks as if she lacks a historical understanding of the Fed: how it comes into being, its true nature and agenda. Therefore she’d embark on this new career path of being a Fed examiner, of which the ostensible job description is to help establish an industry-wide conflict-of-interest policy, and to prevent a sequel to the 2008 financial crisis.

I am not exactly a conspiracy nut, so I don’t know what to make of this Wall Street drama. I have problems being inspired by her independent spirit, and at the same time do not wish to sound too cynical.

R. T. Greenwood

Oct. 13, 2013, 5:19 p.m.

Come on folks. Get your senators and reps to put the clamps on the Federal Reserve.  They are evil and they are creating even more evil in the form of Goldman Sachs and others.

Chicken and egg thing…did the Fed start out evil, or are they becoming evil because of the influence of the Goldman Sachs, Koch Industries, and General Electrics of the world?

The same people, I might add, who finance and control the Republicans in their entirety, the neoliberals among the Democrats, even the Tea Party/“libertarians…(although much of the latter’s base think they’re “grass roots” ‘cuz all they’re allowed to see is the fertilizer they’re being fed).

Is a lot of evidence that federal agencies become a reflection of the morality and ethics of the political party that controls them; for instance, the great mortgage-backed securities pyramid scam happened on the watch of the “law-and-order” Republicans…

Ain’t that strange?

By the way:  The Fed acts as a great dampener on our nation’s financial markets (and so economy).

One thing you should know is you can make the most money if you know in advance when the market (stocks or commodities) is getting ready to make a sudden move and which direction that move will be…

And those moves can be entirely artificial…like, anyone who managed to attend a secret energy task force meeting (or was connected to an attendee) and somehow became aware of a pending invasion of a Middle Eastern nation could align financial resources accordingly so as to benefit from the consequential and entirely predictable upward move in the price of oil…

Likewise, kicking the Fed off-line would enable the interested who had control of sufficient liquidity (through their control of major corporations [which, while not being “people”, surely do have a lot of leverageable cash, physical assets, and credit], hedge funds, personal wealth, existing corporate shareholdings, etc.) to make a huge amount of additional wealth if they can kick the market and/or America’s economy into oscillation…

And without the Fed there to prevent or dampen that oscillation…lollll…the honest wealthy and the 401K holder would quickly find themselves eating from a common soup pot.

All that wealth, just for getting rid of the Fed…no wonder there are some wealthy who admire the idea so much that they buy politicians and political movements in order to pursue the idea.

(Note that they’d be happy to get rid of the SEC, too.)

R. T. Greenwood

Oct. 13, 2013, 6:34 p.m.

What exactly is the Koch Bros connection to the Federal Reserve? As a speculator of currency, don;t you think Soros is more closely tied to Fed policy?  Goldman Sachs is greed personified.  Soros is a speculator and has been convicted as an inside trader in pursuit of that goal.  The Kochs employ 50,000 and produce a myriad of products for consumer consumption.  They contribute to political candidates but liberals far outweigh people in Congress who believe in limited got, free markets, and fiscal responsibility.

R. T. Greenwood

Oct. 13, 2013, 6:43 p.m.

And do you really think the Koch Bros have more power than Warren Buffett? Buffett has been selling off his Moody’s stock as Obama delays taking action against Moody’s for the ratings scandal during the housing bubble. Also, Buffett gains from no Keystone pipeline because his railroad makes money from transporting oil.

The Koch Bros have virtually no political influence to speak of since they are supporting decidedly minority movement in this country.  Really, explain to me what the Koch Bros gain by supporting the Tea Party?

lolll…I do so love it when a suspicion on my part that casting a lure tied just so into a particular pool will yield a bite.

I would concur with you that the Koch brothers would like to destroy our government…especially our government’s ability to protect the American people and our nation and economy against them.

Curious, both the interval between our government attaining the power to prevent misbehavior by large corporations and their owners and the timing of some folks’ decision to finance “libertarian” movements in America…

ibsteve2u: Thanks! A warning to those who want to get rid of the FED. My own take is that all government agencies set up to prevent abuses of any kind are subject to mission creep (buy-offs) to the point that they often come to represent the interests of those who are supposed to be under scrutiny. Or, some agencies are set up to give the impression of serving public interests while in practice they’re actually accomplishing the polar opposite. (Bush’s “Clear Skies initiative” comes to mind.) I’m of the thought that the Federal reserve has long been a hybrid of these two designs.

R.T. Greenwood: “explain to me what the Koch Bros gain by supporting the Tea Party?”

The Tea Party movement is primarily interested in dismantling any and all public services possible, using “fiscal responsibility” as their rationale. Being able to operate business in a country with little to no tax responsibilities along with the loss of governmental safety nets and the stripping of worker’s rights would create a dream scenario for the Koch brothers. ... But you appear to be fairly sharp so I’m pretty sure you already know that….

lolll…I do so love it when a suspicion on my part that casting a lure tied just so into a particular pool will yield a bite.  I would concur with you that the Koch brothers would like to destroy our government…especially our government’s ability to protect the American people and our nation and economy against them.

Curious, both the interval between our government attaining the power to prevent misbehaviour by large corporations and their owners/operators and the timing of some folks’ decision to finance “libertarian” movements in America…

(Forgive me for not including links; ProPublica has apparently decided that undocumented comments are more…reliable.  I further hope that the quoted parties are happy with what attribution I can give.)

To quote Greenpeace (Google “greenpeace Koch Industries Environmental Record”):

The Koch companies have a notorious environmental record.

Some of the more egregious examples include:

  In 2009, the US Justice Department and EPA announced in 2009 that Koch Industries’ Invista subsidiary would pay a $1.7 million penalty and spend $500 million to fix environmental violations at facilities in seven states, in an agreement with the US EPA and Department of Justice.
  In May 2001, Koch Industries paid $25 million to settle with the US Government over a long-standing suit brought by Bill Koch - one of the brothers bought out in 1983 - for the company’s long-standing practice of illegally removing oil from federal and Indian lands.
  In late 2000, the company was charged with covering up the illegal releases of 91 tons of the known carcinogen benzene from its refinery in Corpus Christi. Initially facing a 97-count indictment and potential fines of $350 million, Koch cut a deal with then-Attorney General John Ashcroft to drop all major charges in exchange for a guilty plea for falsifying documents, and a $20 million settlement.
  In 2000, the EPA fined Koch Industries $30 million for its role in 300 oil spills that resulted in more than three million gallons of crude oil leaking into ponds, lakes, streams and coastal waters.
  In 1999 a Koch subsidiary pleaded guilty to charges that it had negligently allowed aviation fuel to leak into waters near the Mississippi River from its refinery in Rosemount, Minnesota, and that it had illegally dumped a million gallons of high-ammonia wastewater onto the ground and into the Mississippi.
  Koch’s negligence toward environmental safety has led to tragic losses of life. In 1996, a rusty Koch pipeline leaked flammable butane near a Texas residential neighborhood. Warned by the smell of gas, two teenagers drove their truck toward the nearest payphone to call for help, but they never made it.  Sparks from their truck ignited the gas cloud and the two burned alive. The National Transportation Safety Board determined that “the probable cause of this accident was the failure of Koch to adequately protect its pipeline from corrosion” and the ineffectiveness of Koch’s program to educate local residents about how to respond during a pipeline leak.

End quote.

The list of members of ALEC is…interesting…and includes the Kochs.  But the reader would not only have to Google that list, but Google the named individuals and corporations and, in the case of individuals who are politicians, Google their stances on, say, giving Wall Street’s investment banks any and all things that they want.  (In case the reader happened to think an argument that used dropping Goldman Sachs’ name as the primary reason to destroy the Fed had any merit.)

One could Google “Politico” and their story “Exclusive: The Koch brothers’ secret bank” to get a head start.

Bloomberg (Google “bloomberg expose koch 2011”) ran an extensive piece on Koch behaviour such as trading with Iran detailing bribery of foreign officials, trading with Iran, stealing oil from native American lands (“reservations”, if you must), and so on.

In summary, I am unable to find any any evidence to support the implication that the Koch brothers act altruistically or with the well-being of the American people and these United States of America as their moral guide; to the contrary, the public evidence states that what they do is to enrich themselves and if Americans are hurt - or killed - because of that, too bad.

On the other hand, I am also unable to find any evidence that Soros or Buffett have acted so directly against the health and well-being of the American people - especially not as a pattern of behavior.

(By the way:  I’m sure glad other websites don’t make it so difficult for me to link to ProPublica stories and so properly attribute what I quote of ProPublica’s work.  There’s a certain irony, in that…)

R. T. Greenwood

Oct. 14, 2013, 7:08 a.m.

When Ron Paul says he does not believe in the FAA he is saying we need freedom so a few hundred plane crashes a year is the price of freedom? Ridiculous! MAYBE just maybe he advocates for an aviation group run by a consortium of airlines.  I think it is a safe bet the pilots will demand 100% safe operation or they won;t fly.

Just like that idiot Max Keiser saying that Fukushima Daichi disaster is a libertarian’s dream.  Not quite. Do you think there was no regulation of that power plant by Japanese regulators and IAEA regulators? And did that regulation work? NO

It is Archie Bunker Absurd to say that the Tea party wants to end all welfare, all regulations, end all tax.  The Tea Party wants to stem the tide of big government.  Romney proved that a state under the powers it has under the U.S> Constitution and its own Constitution could have its own health care program under a balanced budget.  Obamacare will be the next govt program to spiral hopelessly out of control with massive inefficiencies in the process.

So the Koch Bros aren’t rich enough? They want to get another 5% of wealth that they would get from deregulation and lower taxes?  Just ignorant stuff man, Archie Bunker ignorant by you liberals.

No folks.  Look at your NSA.  The Tea Party was advocating about loss of freedom (constitutionally guaranteed freedom) long before the NSA spying (still underway) and black boxes in cars (mandated for future autos) to track your every move.

The Tea Party advocates a balanced budget.  $17 trillion in debt and heading for $25 trillion? The only hope is for the US govt to exert massive control on the economy which means loss of freedom and high unemployment for the foreseeable future.

I hope you got to see LIBERAL 60 Minutes explain to you just how disability is being abused.  And the real problem with disability is the 1) the U.S. is discouraging job creation and 2) people who are capable of joining in the prosperity are getting disability, food stamps, and other welfare.  Welfare is once again a lifestyle choice. And I live in one of the poorer counties in Virginia and I see this human wasteland every day on a personal basis.

So get out of your Archie Bunker Liberal arm chairs and open your mind to what is being said by the Tea Party and Libertarians.  And in a free society, no one is trying to drag you into an ideology. Wish Obama was familiar with that concept.

God bless this woman.

James M. Fitzsimmons

Oct. 14, 2013, 7:25 a.m.

“Too big to fail” equals systemic “moral hazard”. Five years since the financial crisis of 2008 and nothing essentially changed. Why not? I can only guess that smart guys from fancy schools consider that protection from risk is a good deal. Some of the smart guys do “temporary duty” in the government but remain sympathetic to a risk free atmosphere that they will rejoin. They are good compassionate liberals not evil capitalists! They will initiate more Dodd-Frank like legislation on the books but maintain the systemic protection from risk. More quality work for smart guy lawyers, by the way. Nothing more to see here, just another phony scandal.
  Zero leadership anywhere that counts. Carmen Segarra seems to be the exception. Will she be rewarded by this administration for her courage, if exonerated? We shall see. Meanwhile, thanks ProP.

This article is part of an ongoing investigation:
Fed Tapes

Fed Tapes: The Secret Recordings of Carmen Segarra

A confidential report and a fired examiner’s hidden recorder penetrate the cloistered world of Wall Street’s top regulator — and its history of deference to banks.

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