The cozy relationship between financial institutions and their respective regulators has long been known. Concern from reformers and activists comes from all stripes of ideological perspectives. With the attention that Carmen Segarra, the whistleblower of Wall Street, has gained, the noise from the banking establishment pushes back. Here comes the expected spin from the Fed, The New York Fed Slams Tape-Recording Whistleblower, Says She Was Fired After Just 7 Months Over Performance. Read their Statement Regarding New York Fed Supervision. So what is this controversy all about?
How dare a mere low level regulator document the goings on within the financial establishment, Inside the New York Fed: Secret Recordings and a Culture Clash, writes.
“As ProPublica reported last year, Segarra sued the New York Fed and her bosses, claiming she was retaliated against for refusing to back down from a negative finding about Goldman Sachs. A judge threw out the case this year without ruling on the merits, saying the facts didn’t fit the statute under which she sued.
At the bottom of a document filed in the case, however, her lawyer disclosed a stunning fact: Segarra had made a series of audio recordings while at the New York Fed. Worried about what she was witnessing, Segarra wanted a record in case events were disputed. So she had purchased a tiny recorder at the Spy Store and began capturing what took place at Goldman and with her bosses.
Segarra ultimately recorded about 46 hours of meetings and conversations with her colleagues. Many of these events document key moments leading to her firing. But against the backdrop of the Beim report, they also offer an intimate study of the New York Fed’s culture at a pivotal moment in its effort to become a more forceful financial supervisor. Fed deliberations, confidential by regulation, rarely become public.”
In an attempt at damage control, the Fed was looking for a favorable review. What they got was not what they wanted, N.Y. Fed Staff Afraid to Speak Up, Secret Review Found.
“The investigation, conducted by Columbia University finance professor David Beim, was initially confidential but was later released by the Financial Crisis Inquiry Commission.
Mr. Beim’s report called on the New York Fed to demand that its regulatory staffers maintain a “more distanced, high-level and skeptical view” of how the banks they oversee make money.”
A Short History of the Breathtaking Cluelessness of U.S. Financial Regulators, is outlined by the Motley Fool analysis. Any serious observer of the cozy relationships that permeate the financial community knows all too well, that the revolving door turns when favorable regulation decisions spin in the right direction.
Written by: JAMES HALL – continue reading at BATR