Journalism in the Public Interest

N.Y. Fed Moves to Seal Documents in Ex-Bank Examiner’s Suit

At issue: Whether internal emails, records related to supervision of Goldman Sachs are confidential and shouldn’t have been made public as part of Carmen Segarra’s wrongful termination case.


The Federal Reserve Bank of New York (Frank Franklin II/AP Photo)

A federal judge in Manhattan is pondering whether to grant the request of the New York Federal Reserve to seal the case brought by former senior bank examiner Carmen Segarra.

As reported by ProPublica last week, Segarra filed a lawsuit against the New York Fed and three of its employees alleging she had been wrongfully terminated last year after she determined that Goldman Sachs had insufficient conflict-of-interest policies.

On Friday, the Fed asked for a protective order to seal documents in the case as well as parts of the complaint. In a letter to U.S. District Judge Ronnie Abrams, New York Fed counsel David Gross said the information should be removed from the public docket because it is “Confidential Supervisory Information,” including internal New York Fed emails and materials provided to the Fed by Goldman.

“These documents show that at the time (Segarra) left the employ of the New York Fed, she purloined property of the Board of Governors of the Federal Reserve System,” Gross wrote, citing Fed rules that prohibit disclosing supervisory information without prior approval of the Fed.

Gross argues that the Fed’s obligation to keep bank supervisory records secret outweigh the public’s right to know. “The incantation of a ‘public right to know’ cannot ever be a license to discharged employees that they may violate Federal law simply by filing a complaint in Federal court,” Gross wrote.

Segarra and her lawyer could not be reached for comment.

While Abrams considers her decision, Segarra’s lawsuit and appended documents have been removed from Pacer, the online records system for federal courts. The complaint and related documents are available via links in ProPublica’s story and have been published elsewhere online.

Gross states in his letter that Segarra previously made a $7 million settlement offer. The Fed rejected it.

The New York Fed has historically been one of the most opaque financial regulators and maintains that it is not subject to the Freedom of Information Act because it is not a public agency.

Under new powers granted to it by Congress, the Federal Reserve System carries responsibility for ensuring that the nation’s most complex financial institutions are not posing a systemic threat to the world economy.

Because of its location, the New York Fed supervises the majority of the so-called “Too- Big-to-Fail” banks. New York Fed officials acknowledge that the institution failed in its regulatory responsibilities in the lead-up to the financial crisis.

A hearing on the Fed’s request is scheduled for tomorrow in Abrams’ court.

Ray H. Fowler

Oct. 14, 2013, 5:37 p.m.

In the case of the New York Federal Reserve Bank vs. Carmen Segarra, is the NY Fed Bank part of the United States Government and where does it sit in the organizational structure of the Government?

No do not seal this case.  The American public needs to see all of this and how it was handled or not handled, the revolving door of execs between Goldmans and the Fed, unbelievable. Dump it all out there and shine a spotlight on it!

I second the question that Ray proposes here but am afraid that we would both be naive to expect anyone to give a truthful answer. An obfuscatory reply is all that we might hope for.

“The New York Fed has historically been one of the most opaque financial regulators and maintains that it is not subject to the Freedom of Information Act because it is not a public agency.”

The Federal Reserve is a private bank. It is just so intertwined with our govt. that we think that it is a part of it. Mainly because it has Federal in its name. But it is no more a part of our govt. than any other bank.

Frank Johnson

Oct. 15, 2013, 1:47 p.m.

It’s all explained in “The Creature from Jekyll Island”.
The Fed was formed as a partnership of private banks.
It is as Federal as Federal Express and it has no reserves.
The Fed sucks the wealth out of the U.S. through purposeful inflation.

Just look at how much gasoline a dollar buys today versus 50 years ago, and compare that to the amount of gas that an ounce of gold could buy then and now.  The answer is shocking.

“They are private credit monopolies which prey upon the people of the United States for the benefit of themselves and their foreign customers; foreign and domestic speculators and swindlers; the rich and predatory money lenders. This is an era of economic misery and for the reasons that caused that misery, the Federal Reserve Board and the Federal Reserve banks are fully liable.”

Rep. Louis T. McFadden, 1932

It’s infuriating how the public is so duped by the Federal Reserve/banking cartel. The idea of borrowing money from a private entity, who commissions the US Treasury to print money for them, is outrageous and absurd. When will America wake up to this evil that is bankrupting the nation? It’s not just the Federal Reserve but the Income Tax that needs to go. Income Tax is unconstitutional and simply a mechanism of the Federal Reserve to collect from us and keep us enslaved. Wake up America! Hungary got it right by recently kicking out the international bankers and becoming a sovereign state once again.

Gosh, secrecy to protect someone persecuting a whistle-blower?  Naw, that would never happen here…

As for the anti-Fed thing, let me ask you guys a question.  Understand that I’m sort of a connoisseur of conspiracy theories and have bought into the theory that the Federal Reserve is some illegal monstrosity, in the past.  So when I ask skeptical questions, it’s not because I support the status quo or buy into whatever The MSM(TM) tells me.

That said, other than third-hand reports from books like “The Creature from Jekyll Island,” where’s the proof?  I ask because I’ve started noticing that the same people who deride the Fed as illegal also generally use the Post Office as the exemplar of government inefficiency, despite the fact that the USPS is a private company whose contract with the government forbids them from making a profit.  So, if they get one wrong, I don’t see how we can trust them to get the other right.

Also, assuming that Congress actually exerts its Constitutional control over economic issues like taxes and money-printing (hypothetically, I mean), what difference would it make whether the action is carried out through government or private payroll?  Me, I worry more about putting “civilian contractors” in the field alongside our military, considering their revenue rests on continuing warfare.

Again, I’m OK believing this, but believing it because I need a scapegoat and banks are always parasites…I don’t know, it feels kind of lazy, in the absence of more proof than the “no more federal than Federal Express” mantra and a book that says so.

John, I felt the same way you did. Without intense research can one put the pieces together. Here is what I personally discovered to convince me.

During the second circuit court of appeals case for FOX News & Bloomberg v. Board of Governors in 2010, a lawyer in defense of the Federal Reserve made revealing statements that prove the Federal Reserve Banks are private institutions. The Federal Reserve lawyer stated bluntly under oath, in a U.S. Federal Court, that Federal Reserve Banks are “100% privately held.”

Yvonne Mizusawa, Federal Reserve System Board of Governors Senior Counsel, stated:

“[Federal Reserve Banks] are not [Federal] agencies. Yes, they are not agencies, your Honor. They are persons under FOIA (Freedom of Information Act). Their stock is owned by member banks in their district, 100% privately held. They have private boards of directors, majority of those boards are appointed by the independent banks, private banks, in the district. They are not agencies. They have no rule making authority, and they do not have adjudicated authority.”

Source:  (at 46:22 to 46:47 of the video clip)

Unfortunately, the CSPAN site is down with the link to the archive; however, when it comes up again it will verify the quote in the text.

Frank Johnson

Oct. 16, 2013, 2:51 p.m.

Your pathetic attempt at obfuscation and distraction above won’t work.  The Federal Reserve Act specifically states that the Federal Reserve Banks are CORPORATIONS, not government agencies (link and excerpt below for Easy Reference).
You’ll have to try a little harder next time if you want to keep fooling more of the people for more of the time.

4. General corporate powers
Upon the filing of such certificate with the Comptroller of the Currency as aforesaid, the said Federal reserve bank shall become a body corporate and as such, and in the name designated in such organization certificate, shall have power—

First. To adopt and use a corporate seal.

Second. To have succession after the approval of this Act until dissolved by Act of Congress or until forfeiture of franchise for violation of law.

Third. To make contracts

Fourth. To sue and be sued, complain and defend, in any court of law or equity.

Fifth. To appoint by its board of directors a president, vice presidents, and such officers and employees as are not otherwise provided for in this Act, to define their duties, require bonds for them and fix the penalty thereof, and to dismiss at pleasure such officers or employees. The president shall be the chief executive officer of the bank and shall be appointed by the Class B and Class C directors of the bank, with the approval of the Board of Governors of the Federal Reserve System, for a term of 5 years; and all other executive officers and all employees of the bank shall be directly responsible to the president. The first vice president of the bank shall be appointed in the same manner and for the same term as the president, and shall, in the absence or disability of the president or during a vacancy in the office of the president, serve as chief executive officer of the bank. Whenever a vacancy shall occur in the office of the president or the first vice president, it shall be filled in the manner provided for original appointments; and the person so appointed shall hold office until the expiration of the term of his predecessor.

Sixth. To prescribe by its board of directors, by-laws not inconsistent with law, regulating the manner in which its general business may be conducted, and the privileges granted to it by law may be exercised and enjoyed.

Seventh. To exercise by its board of directors, or duly authorized officers or agents, all powers specifically granted by the provisions of this Act and such incidental powers as shall be necessary to carry on the business of banking within the limitations prescribed by this Act.

“The incantation of a ‘public right to know’ cannot ever be a license to discharged employees that they may violate Federal law simply by filing a complaint in Federal court,” (Fed Reserve attorney David Gross). My question to Mr. Gross is “why?”—this is true because…??? I don’t understand the many legal arguments above, splitting hairs over whether the NY Fed Reserve is a governmental, quasi-governmental, or private agency, or what difference it makes, nor do I understand what is so sacrosanct about “confidential supervisory information”. Why is it “confidential”, other than someone says so, constituting a convenient transparent claim a defendant too readily makes to prevent relevant facts and communications from review and evaluation—on the record—by a judge or jury in a wrongful termination (or whatever other) case. Excepting circumstances where sensitive national security issues are clearly involved (not the case here), it seems to me that the public’s right to know trumps all else.—particularly so in this case where shoddy unregulated, foolhardy, cavalier, not to say illegal, banking practices wreaked havoc on the domestic and international economies quite recently and many say it is going to happen again. Whatever the Fed and Goldman Sachs were up to for which examiner Segarra was fired for questioning (her job) warrants a full airing in a courtroom and not some off-the-record, sealed disposition where her documented evidence of wrong-doing is protected from disclosure. This is not justice but rather deal-making, and the public is sick of it. The upside of this I suppose is that Segarra is neither incarcerated nor hiding out in a foreign country or embassy for telling the truth about dangerous and illegal US policies and activities.

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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