{"id":18295,"date":"2014-09-27T11:31:13","date_gmt":"2014-09-27T15:31:13","guid":{"rendered":"http:\/\/ssgreenberg.name\/PoliticsBlog\/?p=18295"},"modified":"2014-09-27T11:39:39","modified_gmt":"2014-09-27T15:39:39","slug":"inside-the-new-york-fed-secret-recordings-and-a-culture-clash","status":"publish","type":"post","link":"https:\/\/ssgreenberg.name\/PoliticsBlog\/2014\/09\/27\/inside-the-new-york-fed-secret-recordings-and-a-culture-clash\/","title":{"rendered":"Inside the New York Fed: Secret Recordings and a Culture Clash"},"content":{"rendered":"

Elizabeth Warren has posted on her Facebook page<\/a> a commentary on the Propublica<\/em> article Inside the New York Fed: Secret Recordings and a Culture Clash<\/a>.\u00a0 Warren’s comment on the article are:<\/p>\n

When regulators care more about protecting big banks from accountability than they do about protecting the American people from risky and illegal behavior on Wall Street, it threatens our whole economy. We learned this the hard way in 2008. Congress must hold oversight hearings on the disturbing issues raised by yesterday’s whistleblower report when it returns in November – because it’s our job to make sure our financial regulators are doing their jobs.<\/p><\/blockquote>\n

I agree that the story is quite disturbing and seems to be an indication of why our regulatory system is continuing to fail to protect us.\u00a0 I think that the very reason that inequality has grown faster under Obama than under Bush is exactly the fact that we bailed out the rich but refused to prosecute them for the crimes they committed.<\/p>\n

Given what I have just said, I must disagree with the way the article ended.\u00a0 It cuts the knees out from under their own story about a woman, Segarra, who was hired to be the Goldman Sachs regulator.\u00a0 Her boss was Silva.\u00a0 The Santander case was described earlier in the article.<\/p>\n

The audio is muddy but the words are distinct. So is the tension. Segarra is in Silva’s small office at Goldman Sachs with his deputy. The two are trying to persuade her to change her view about Goldman’s conflicts policy.<\/p>\n

“You have to come off the view that Goldman doesn’t have any kind of conflict-of- interest policy,” are the first words Silva says to her. Fed officials didn’t believe her conclusion \u2014 that Goldman lacked a policy \u2014 was “credible.”<\/p>\n

Segarra tells him she has been writing bank compliance policies for a living since she graduated from law school in 1998. She has asked Goldman for the bank’s policies, and what they provided did not comply with Fed guidance.<\/p>\n

“I’m going to lose this entire case,” Silva says, “because of your fixation on whether they do or don’t have a policy. Why can’t we just say they have basic pieces of a policy but they have to dramatically improve it?”<\/p>\n

It’s not like Goldman doesn’t know what an adequate policy contains, she says. They have proper policies in other areas.<\/p>\n

“But can’t we say they have a policy?” Silva says, a question he asks repeatedly in various forms during the meeting.<\/p>\n

Segarra offers to meet with anyone to go over the evidence collected from dozens of meetings and hundreds of documents. She says it’s OK if higher-ups want to change her conclusions after she submits them.<\/p>\n

But Silva says the lawyers at the Fed have determined Goldman has a policy. As a comparison, he brings up the Santander deal. He had thought the deal was improper, but the general counsel reined him in.<\/p>\n

“I lost the Santander transaction in large part because I insisted that it was fraudulent, which they insisted is patently absurd,” Silva said, “and as a result of that, I didn’t get taken seriously.”<\/p>\n

Now, the same thing was happening with conflicts, he said.<\/p>\n

A week later, Silva called Segarra into a conference room and fired her. The New York Fed, he told Segarra, who was recording the conversation, had “lost confidence in [her] ability to not substitute [her] own judgment for everyone else’s.”<\/p><\/blockquote>\n

I commented in the article’s comment section<\/a> and on the Warren Facebook post<\/a>:<\/p>\n

At the end of the article the quarrel seemed to be over whether or not Goldman had a conflict of interest policy.<\/p>\n

Why couldn’t they come to an agreement to say that “Goldman Sachs had a conflict of interest policy, but that it did not comply with Fed guidance”?\u00a0 Those were her own words.\u00a0 Why was she so adamant that she could only express her thoughts as “They didn’t have a policy” when she knew how those literal words were so easily refuted?\u00a0 Her response to that refutation would be the exact words I proposed above.<\/p>\n

There is obviously more to this story than can fit in a news article.\u00a0 However, you do have to wonder why the reporters would put it the way they did in the face of my obvious question which any reasonable editor would have asked?<\/p>\n

Am I the only one to see this hole in the case?<\/p><\/blockquote>\n

I just wish that this strong case about how regulation is being badly managed at the Fed didn’t have this silly ending to detract from the case.\u00a0 Moreover, it is too bad that the people presenting the case, Propublica and Elizabeth Warren, don’t choose to address this flaw.<\/p>\n","protected":false},"excerpt":{"rendered":"

Elizabeth Warren has posted on her Facebook page a commentary on the Propublica article Inside the New York Fed: Secret Recordings and a Culture Clash.\u00a0 Warren’s comment on the article are: When regulators care more about protecting big banks from accountability than they do about protecting the American people from risky and illegal behavior on […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[166],"tags":[],"class_list":{"0":"post-18295","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-stevegsposts","7":"czr-hentry"},"_links":{"self":[{"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/posts\/18295","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/comments?post=18295"}],"version-history":[{"count":4,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/posts\/18295\/revisions"}],"predecessor-version":[{"id":18299,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/posts\/18295\/revisions\/18299"}],"wp:attachment":[{"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/media?parent=18295"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/categories?post=18295"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ssgreenberg.name\/PoliticsBlog\/wp-json\/wp\/v2\/tags?post=18295"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}