NY Fed Fired Examiner Who Wouldn't Change Goldman Findings

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.

Segarra said in a recent interview:

“They wanted me to falsify my findings and when I wouldn’t, they fired me.”

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Thursday (10 october 2013), Segarra filed a wrongful termination lawsuit [2] 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.
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A federal judge rejected the Federal Reserve Bank of New York’s plea to seal documents in a wrongful termination lawsuit filed by a former bank examiner who claims she was fired for doing her job.

U.S. District Judge Ronnie Abrams ruled today in the case by Carmen Segarra against the New York Fed and three employees. Much of the material the Fed hoped to keep off limits, including 67 paragraphs from Segarra’s complaint and multiple exhibits, can be found on ProPublica’s website and others.
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The Federal Reserve Bank of New York has asked a judge to throw out a lawsuit by a former bank examiner who says she was dismissed after finding fault with Goldman Sachs’ conflict-of-interest policies.
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A former bank examiner for the Federal Reserve Bank of New York requested a federal court dismiss the New York Fed's motion to dismiss her lawsuit in which she alleges she was fired because of her views on Goldman Sachs Group Inc.
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The New York Fed has until Feb. 4 to reply to the motion. The Court is expected to hear oral arguments on the defendants' motion to dismiss the complaint March 4.

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A former bank examiner with the Federal Reserve Bank of New York lost a lawsuit against her former employer after a federal judge ruled on Wednesday that she had not shown that she was fired over refusing to change certain findings about Goldman Sachs.

The judge, Ronnie Abrams, said in her ruling that the examiner, Carmen M. Segarra, failed to prove that her firing was directly related to her finding that the bank had exhibited certain questionable ethics practices, including a lack of internal conflict-of-interest policies.

“The law only protects those who adequately allege that they have suffered retaliation for providing information regarding a possible violation of a ‘law or regulation,’ as distinct from what the law treats as advisory guidance,” the judge wrote. “Plaintiff has not done so here.”
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Fresh dirt has spilled at Goldman Sachs — and this time it has been caught on tape.

David Solomon, who took the helm of the Wall Street giant from Lloyd Blankfein last week, once blew off criticism of Goldman’s double-dealing in a big energy merger as a matter of “perception” — a cheeky dismissal that came despite a class-action lawsuit against the deal that eventually cost Goldman $20 million in fees.

That’s among the cringeworthy quotes that Carmen Segarra claims she secretly recorded behind closed doors for her new book “Noncompliant: A Lone Whistleblower Exposes the Giants of Wall Street.” The 340-page exposé expands on her previous claims that Goldman Sachs has long exploited an improperly cozy relationship with Wall Street regulators.
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Carmen Segarra, a former New York Federal Reserve expert examiner who was embedded at Goldman Sachs between November 2011 and May 2012, believes that our banking system is “broken” because of institutionally weak oversight.

“I don’t think that we have appropriately understood how systemically broken the system is,” Segarra told Yahoo Finance’s Final Round on Thursday. “I don’t think that has been baked into the calculations that are made in Wall Street in terms of how the dollar is valued, how much systemic risk is being injected by the failure to supervise banks.”
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“This is a culture that rewards bad behavior systemically,” she said. “And so because the issue is so systemic, fixing it is going to take a lot of time and a lot of effort.”
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... In 2014, she provided ProPublica and “This American Life” with 46 hours of recorded conversations with colleagues during her time at the Fed.
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Segarra says nothing has changed since her termination.

“I would say that the biggest proof that nothing has changed is that you have David Solomon as CEO of Goldman Sachs,” she argues. “I mean, the book lays out a very compelling case for the fact that his unit was in shambles, that he was running a unit that from a legal and compliance standpoint had deep issues.”

She further claims that the Fed was “very well aware of these issues.” Ans she asserts that without the will to rein in the banks, we are not ready in case another crisis hits.
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