In the fall of 2011, Carmen Segarra landed a job as a bank examiner at the New York Fed.
Upon being hired, Ms. Segarra was assigned to examine Goldman Sachs. In particular, she was tasked with determining whether the bank’s conflict-of-interest program was in compliance with current Federal Reserve guidelines. (The Fed’s guidelines require the bank to ensure its relationship with one client does not conflict with another client.) Pretty straight forward stuff.
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Ms. Segarra was soon staring into the belly of the beast and was astonished by her findings.
In fact, she claims the lack of Federal Reserve oversight was so egregious that she secretly recorded incriminating conversations deep inside the Federal Reserve Bank of New York.
But what happened next is now at the center of an epic legal battle that pits Ms. Segarra against some of the most powerful forces on Wall Street.
Upon concluding the investigation, Ms. Segarra’s findings were considered at a meeting at the Federal Reserve Bank of New York.
According to NYTimes/DealBook:
“At a March 2012 meeting, a group of examiners at the Federal Reserve Bank of New York agreed that Goldman Sachs had inadequate procedures to guard against conflicts of interest — guidelines aimed at stopping firms from putting their pursuit of profit ahead of their clients’ best interests.
The examiners voted to downgrade a confidential rating assigned by the New York Fed that could have spurred costly enforcement actions and other regulatory penalties. It is not known whether the vote in fact led to a rating change. The former examiner who pushed for a downgrade, Carmen M. Segarra, now contends in a lawsuit filed on Thursday that just weeks after the vote, her superiors asked her to change her findings on Goldman and fired her after she refused.”
Ms. Segarra claims that her superiors determined that her position on Goldman Sachs was not “credible.” When she refused to change her report, she was fired.
The New York Times even weighed in on their own story, stating:
The lawsuit, along with a review by The New York Times of confidential government documents and internal e-mails, raises questions about the success of Goldman’s efforts to police potential conflicts.
Now, armed with 46 hours of secret recordings and a long list of wrongdoings by both the Fed and Goldman Sachs, Ms. Segarra is preparing to face her former employer in court after being, in her words, “wrongfully terminated.”
After hearing the secret audio recordings, Michael Lewis, the author of Flash Boys: A Wall Street Revolt, stated: “The Ray Rice video for the financial sector has arrived.”
The Federal Reserve couldn’t even muster a novel response. Like clockwork, it immediately moved into attack mode calling Ms. Segarra’s character into question by trotting out officials accusing her of believing “conspiracy theories.”
Anyone who has the guts to stand up to the Federal Reserve, one of the world’s most powerful financial institutions, gets my approval. The shadowy recesses of the corrupt Federal Reserve system should be disinfected with a little bit of sunshine. Ms. Segarra’s effort to provide “we the people” with audio evidence of the Fed’s inner corruption is a gift. It should be applauded by every citizen who cherishes their liberty.