Journalism in the Public Interest

So Who is Carmen Segarra? A Fed Whistleblower Q&A

Ex-New York Fed examiner fired after criticizing Goldman Sachs has advice for Janet Yellen: It will take tough oversight to stop the next financial crisis.

Carmen Segarra outside the Federal Reserve Bank of New York on Oct. 10, 2013. (Nabil Rahman for ProPublica)

Former bank examiner Carmen Segarra vaulted into public consciousness earlier this month when she filed a wrongful termination lawsuit alleging that the Federal Reserve Bank of New York fired her after she refused to go soft on investment banking behemoth Goldman Sachs.

As ProPublica has reported, the Fed hired Segarra in late 2011 as part of a group of examiners brought on to monitor systemically important banks in the aftermath of the Dodd-Frank regulatory overhaul. The Fed wanted experts in key areas — such as operations, compliance and credit risk — to examine the “Too Big To Fail” financial institutions.

Segarra's career path seemed to make her a perfect fit. Segarra, 41, was born in Indiana, raised mostly in Puerto Rico and graduated from Harvard. Her father, a doctor, encouraged a life-long love of learning. She is a polyglot, fluent in Spanish and French, conversant in German and Italian. Even in the midst of preparing her lawsuit, she continued with classes in Dutch, which she says is "totally messing up my German."

After getting a master's degree in French cultural studies at Columbia's campus in Paris, she went on to law school at Cornell. She then spent 13 years working at different financial firms, including Citigroup and Société Générale. Outside of the office, she held leadership positions in the Hispanic National Bar Association. Hired by the Fed as a legal and compliance specialist, she was told to pay particular attention to how Goldman was complying with the Fed's requirements on conflicts of interest.

Segarra says she was fired after she found that Goldman lacked an adequate company-wide policy to manage conflicts of interest — and after her superiors urged her to change this finding and she refused. The Fed has denied any wrongdoing in the case, as has Goldman, which is not a defendant in Segarra’s lawsuit.

Readers have asked who is this woman who dared to challenge two of Wall Street’s most powerful institutions. We put some questions to Segarra to learn more about her background.

Q. Bank examiner — to most people that seems an obscure job. What’s the attraction?

A: I actually studied business law and regulation in law school. I co-wrote a law review article on Y2K [the millennial computer bug], which ended up being published. As a result of that, my co-author and I were asked to work on setting up the Y2K legal and compliance program for a bank. I discovered early on that I enjoyed learning about a law and immediately applying it, much the same way that I enjoy learning and speaking a new language. As a general practitioner, I have worked closely with a wide range of laws and regulations that apply across the banking and investment sectors, as opposed to just specializing in one particular type of law or regulation. As a bank examiner, you get to use that knowledge and those skills to evaluate what others have built, and, if and when necessary, point out ways to improve them.

Q. Some commenters say your story isn’t surprising — investment banking is all about conflicts. Agree?

A. Sadly, yes. But it doesn't have to be that way. There are laws, rules, and regulations already in the books that, if regulators enforced them properly, would go a long way towards fixing this problem.

Q. Some, including Michael Silva, the senior fed official at Goldman at the time of your examination, have cited Goldman’s Code of Conduct as evidence that it had a firm-wide conflict-of-interest policy. Why do you believe that this did not satisfy Fed requirements?

A. Goldman did not think its Code of Conduct was a firm-wide conflicts-of-interest policy. When we asked for a copy of their firm-wide conflicts-of-interest policy, Goldman did not submit its Code of Conduct to us for our consideration. Goldman was correct not to think so. SR 08-08 [the Fed requirement for firm-wide conflicts-of-interest policies and procedures] and its supporting and related documentation do provide guidance as to the content you would expect to see discussed in a policy. Goldman's Code of Conduct does not satisfy the requirements and expectations of SR 08-08. Other banks agree with Goldman. At the time, some had adopted both a Code of Conduct, which these banks did not consider a policy, as well as separate conflicts-of-interest policies. My direct management and some of my peers did not think Goldman's Code of Conduct was a conflicts-of-interest policy. Policies in banks are actually pretty standardized documents, with clear titles and content directly related to the title/purpose of the document, written in a language meant to be understood by every employee at every level.

Q. Does the Fed have the resources to keep up with big banks?

A. The Fed is self-funded, so yes. The issues are lack of backbone, transparency, thoroughness and perseverance, not lack of resources.

Q. If you had 10 minutes with Janet Yellen [President Obama’s nominee to be chairwoman of the Fed], what advice would you give her?

A. Stimulus and good monetary policy are keys to getting the economy back on track. Although not as sexy, transparent, thorough, and rigorous supervision, constantly and consistently implemented across all supervised institutions, is key to preventing the next financial crisis.

Q. Goldman says it has overhauled its policies and procedures to manage conflicts. Based on their report, do you think the bank would pass muster now?

A. The report does not provide enough detail to ascertain whether or not they would pass muster. You would really have to look at the actual policies, procedures, and other supporting elements they say they have implemented and measure them against SR 08-08 before making that determination.

Q. Would you call yourself a whistleblower?

A. Absolutely!

My suggestion would be to nominate her for Fed Chairman. Of course, the chances of that happening are about as likely as Jamie Dimon being fired or anyone of importance being prosecuted. Too many Fed personnel are too cozy with the executives that run these banks.

Francisco J. Serrano

Oct. 28, 2013, 3:16 p.m.

What would be the future if this continues?

Anthony Vera

Oct. 28, 2013, 4 p.m.

Truth be told, I never expected Serrano’s level of integrity and courage would be possible at the Fed, and her dismissal sort of bares it out.  I also have no expectation that Yellen will make any difference at an institution controlled by the regulated.  A true test of Yellen’s regulatory spine would be to hire Serrano back and send her into the devil’s nest - if Serrano would be so inclined.

Oooops.  Sorry Ms. Segarra. .

Francisco J. Serrano

Oct. 28, 2013, 4:21 p.m.

Anthony, thank you, but Im in another line of business…  LOL :)

Antonio Zuniga

Oct. 28, 2013, 4:47 p.m.

She is emblematic of her generation’s pursuit of truth.  Her gutsy, straightforward manner is to be admired.  She must have known the way it would turn out.  Her integrity is a reflection of good parenting; the Fed’s craven action evidences the plutocrats’ control of our national institutions and their lack of tolerance for those who do not toe the line.  The banner used to attract middle class achievers into regulatory agencies should be “Join regulatory institutions of power, but tread lightly, you’re only an employee; you have to respect and kneel before the true powers.” 

The good thing is the millennial group is coming up and more of them will share Ms. Segarra’s ideals; change is coming, let us not give up hope of a better world.  The alternative is still a violent revolution.

Mrs. Segarra, you’ve been indoctrinated to believe that the likes of the Fed actually have a purpose. Perhaps it is time for you to take a huge step back and look at the real intentions of the corrupt system known as the Federal Reserve.

Congress designated the US Treasury alone to have the power to print currency. The fact that the Fed was ultimately granted that power (whom you surely must know is a private corporation comprised of bankers, which poses as a direct conflict of interest to all citizens of this once great country) to print our currency out of thin air then charge US interest, is a huge fraud. The international banking cartel has deliberately manufactured all the debt around the globe to enslave us.

Please look into the situation that is going on in Hungary right now as a clear cut example of a nation that has recently realized this corrupt system and is suffering a huge backlash for trying to get away from it. The government of Hungary has finally kicked out the International Monetary Fund and is effectively printing their own currency; with that they are returning to sovereignty which the rest of the world desperately needs to follow suit.

I never though I would look up to a younger person as a hero, she’s an awesome young woman with good old fashion grit, This is what I want the cloth of the American future to be cut from, I’ll have to use her for my 8 years old to model herself after.

I must admit that I was a little remiss in knowing what some were commenting this weekend when it was commented that this young women shouldn’t have been fired. Its apparent that the big banks walk all over the Fed when it comes to regulation, either that or they are sooooooooo much in bed with them, it doesn’t really matter. Seems the Fed operates just like the NSA, extra-legally: They both think they don’t have to follow the laws of the nation.

Here is a young professional with gobs of integrity, a solid set of core values, well educated, very bright, articulate and knows how to ‘stand her ground.’  Many more like her needed inside the Beltway.  Let’s see if Ms. Yellen has the same courage and rehires her.  Keep up the great work Ms. Segarra.

” Q. Would you call yourself a whistleblower?

A. Absolutely! “

~~~interesting answer, can’t wait to see the proof when she/they get it unveiled, ~~~if this story about getting canned for making waves is the only proof…it proves nothing much other than some interoffice drama which hardly qualifies as whistleblower status. 

I think she cries wolf, till I see the real story.

so tame;)

I didn’t have much to say other than “good for her,” but it occurred to me why:  This is behavior I expect.  It bothers me much more that people like Segarra are the exception, rather than the rule, in organizations.

I wish Segarra luck, but it’s depressing that she’s a hero for doing what everybody at the Fed should be doing.

Next time try to file a RICO style action these PEOPLE only respond to

criminal charges.



Nov. 26, 2013, 8:33 p.m.

Nice to see a Segarra kicking ass and taking names.

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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