The most incredible thing you realize from Carmen Segarra’s account of her brief stint at the Fed, is that when push came to shove and non-compliance issues were revealed, her bosses had no backbone whatsoever and in fact scrambled to protect the banks and coverup their malfeasance.
Incredibly, this was still business as usual just a couple of years after the banks destroyed the global economy, ripped apart the rule of law, and demanded and received trillions in taxpayer backstops and bailouts.
So were Carmen’s efforts all for naught? Thanks to her secretly recording over 46 hours worth of conversations, it’s possible that her whistleblowing may ultimately bear some real fruit.
In the near-term, the most interesting angle is whether or not it will affect the fate of the “Audit the Fed” bill in the U.S. Senate.
Elizabeth Warren has called for congressional hearings into allegations that the Federal Reserve Bank of New York has been too deferential to the firms it regulates in light of the Segarra revelations.
Submitted by Michael Krieger, Liberty Blitzkrieg:
I finally had a chance to listen to the hour long interview of former bank examiner and whistleblower, Carmen Segarra, with “This American Life.” In the event you haven’t taken the time to listen for yourself, I can’t emphasize enough how important it is that you do.
Whether you listen to it yourself or not, I think it’s worthwhile to share what I believe are the most important takeaways from the “Goldman Tapes,” since you cannot solve a problem unless you understand it clearly at its core.
First, a little background. Carmen Segarra is the woman who worked at the Federal Reserve Bank of New York as a bank examiner.
She was assigned specifically to Goldman Sachs, and was ultimately fired for asking too many questions. These employees are positioned within certain banks in order to oversee them and alert their bosses about any unscrupulous activities. At least that is what is claimed.
The most incredible thing you realize from Segarra’s account of her brief stint at the Fed, is that when push came to shove and non-compliance issues were revealed, her bosses had no backbone whatsoever and in fact scrambled to protect the banks and coverup their malfeasance. Incredibly, this was still business as usual just a couple of years after the banks destroyed the global economy, ripped apart the rule of law, and demanded and received trillions in taxpayer backstops and bailouts.
The tactics that her bosses used, essentially amounted to Orwellian Jedi mind tricks. For example, when she brings up the fact that she incredulously heard a Goldman Sachs employee state that “consumer protections don’t apply to people beyond a certain amount of wealth,” a Fed colleague quickly informed her that “she didn’t really hear that.”
Then, when she came in for a meeting with her boss Michael Silva, who was a senior Fed supervisor with oversight responsibilities for Goldman Sachs, he told her point blank that:
“Credibility as an employee at the Fed has to do with perception, not reality.”
So as many of us suspected all along, the entire thing really is a smoke and mirrors scam and the top guys know it. Naturally, as Carmen started asking more pointed questions in her appropriately pugnacious manner, she received pushback from all angles.
At one point her direct boss, Jonathan Kim, calls her in for a meeting and they start to discuss her performance.
When she challenges him by stating that she is performing her job duties perfectly, he squirms and states: “I’m here to change the definition of what a good job is.” Jonathan Kim is still employed by the Federal Reserve.
When you listen to this interview, what pops out at you more than anything else is that when Ms. Segarra joined the Fed she genuinely and naively thought it was actually determined to make up for the inexcusable mistakes of the past. Perhaps this was due to the fact that David Beim had been commissioned by New York Fed President William C. Dudley in 2009 to look into the institutions practices. What the probe found was a timid and captured institution who’s culture needed to be changed dramatically.
However, it doesn’t take a brain surgeon to recognize that an institution’s culture can’t be changed by the people who created it in the first place. Rather, you need to inject new blood from top to bottom.
Nevertheless, the most significant change in personnel at the New York Fed following the financial crisis was the promotion of its leader, Timothy Geithner, to run the U.S. Treasury Department. I don’t want to revisit here what a disastrous crony he is, but if you need a refresher, read: Matt Stoller Destroys Timothy Geithner in His Epic Review of “Stress Test.”
Naturally, when fellow employees see their former boss promoted after overseeing the destruction of the global economy by the banks he was supposed to regulate, how much do you think things are going to change? Exactly.
So what Carmen discovered at the Fed was “a giant afraid of its own power.” She’s absolutely right. What is completely clear from listening to this interview, is that so-called U.S. regulators are a complete and total joke. In a nutshell, it appears to me that the type of person who wants to work at the Fed, and who Fed leaders want to work there, are generally timid and non-aggressive beings by nature, completely outmatched personality-wise in every way when dealing with the ruthless, sociopathic parasites in the banking industry.
These are people who are long on talk, and extraordinarily short on action. If the Fed was led by someone like Carmen Segarra, our financial system would be much more stable and ethical, not due to its own nature, but out of fear. Instead, the financial system is run by psychopaths; juggling with and making spreads off of an endless and always expanding arsenal of financial nuclear weapons, trading and manipulating civil society into oblivion with absolutely zero concern of ever being held accountable for anything. Ms. Segarra tried to inject some real accountability into the banking system, and for her efforts she was fired.
So were Carmen’s efforts all for naught? Thanks to her secretly recording over 46 hours worth of conversations, it’s possible that her whistleblowing may ultimately bear some real fruit. In the near-term, the most interesting angle is whether or not it will affect the fate of the “Audit the Fed” bill in the U.S. Senate. The reason I bring this up is because Elizabeth Warren has called for congressional hearings into allegations that the Federal Reserve Bank of New York has been too deferential to the firms it regulates in light of the Segarra revelations.
The timing of her call for a “congressional hearing” is interesting considering the “Audit the Fed” bill just soared through the U.S. House of Representatives with a whopping bipartisan margin of 333-92. It is expected to die in Harry Reid’s Senate, but Sen. Warren could do a lot of good by advocating for the bill, rather than focusing on another useless hearing. As the New York Sun accurately points out:
Could a political marriage of Rand Paul and Elizabeth Warren finally open up the question of the Federal Reserve? We ask because of the call this week by Senator Elizabeth Warren for hearings into the allegations aired on National Public Radio that the New York Fed has been treating the banks it supervises with kid gloves. Those allegations were the result of an investigation that NPR reported in league with another liberal news service, Propublica. It happens that Mrs. Warren’s call came but ten days after the House passed the Federal Transparency Act.
Known as Audit the Fed, the measure would subject the Fed and its regional banks to a real audit, one that includes not only their books but their formation of monetary policy and their full range of operations. It just passed the House by the astonishing, bi-partisan margin of 333 to 92, wider than the margin the last time it was passed. In other words, passage wasn’t just a tip of the hat as it was deemed to be two years ago to a departing Congressman Ron Paul, who was the originator of this demarche but has since left Congress. It turns out that the People’s House wants this measure.
Yet Reuters reports that the legislation “is expected to meet a fate similar to its predecessor’s: death in the Democratic-controlled Senate.” Could that be turned around? The entry of Mrs. Warren into this fray makes us wonder whether there might be some hope that — as happened in the House, where the measure originally had tough sledding — Democrats and Republicans could come together.Particularly since a logical partner on this measure would be Ron Paul’s son, Senator Rand Paul, who has had a companion measure to the House bill before the Senate for some time.
The gentlewoman from Massachusetts may be a socialist and the gentleman from Kentucky may be a libertarian. What that means is that they could make different uses of what would be turned up by a thorough audit of the Fed. Yet it strikes us at least they have a common interest in finding out what in Sam Hill is going on at the central banking system that the Congress created. The NPR/ProPublica report is shocking enough; it includes tape recordings made by a Federal Reserve bank examiner, Carmen Segarra, before she was fired by the Federal Bank of New York in 2012.
As the most insidious, reckless, and powerful institution on planet earth, the Federal Reserve needs accountability…and it needs it now.