FEDGATE: Whistleblower’s Secret Tapes Threaten to Expose Federal Reserve

 
by Jerry Robinson

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.

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:

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:

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.

Claims of “too-cozy” relations between Wall Street and the Federal Reserve come as no shock or surprise to most people who understand the financial world. It’s a given that the big banks on Wall Street put their own interests ahead of their clients. Case in point: In the run-up to the 2008 financial crisis, Goldman Sachs dumped billions of dollars of soon-to-be worthless real estate investments onto its clients. (See this, and this, and this and this.)

In 2009, the Federal Reserve Bank of New York conducted a study of itself to determine what it needed to improve to prevent a major financial crisis like the one experienced in 2008.

Michael Lewis provides a concise summary of their findings:

Based upon Ms. Segarra’s lawsuit, Federal oversight since the 2008 stock market collapse has failed to reform the Wall Street “bankster” culture.

In 2011, a Senate subcommittee completed a two-year investigation into the inner workings of Goldman Sachs. After conducting hundreds of interviews and reviewing thousands of internal company documents and emails, the subcommittee chairman summed up the findings by saying that the bank was “a financial snake pit rife with greed, conflicts of interest, and wrongdoing.” He added that Goldman Sachs had “clearly misled their clients and they misled the Congress.”

In his controversial article entitled, The Great American Bubble Machine, Matt Taibbi writes:

But, in the end, Goldman Sachs is just a spoke in the larger wheel of the corrupt Federal Reserve system. And who really believes that the Fed is looking out for the American people?

If the American people can ever have any hope that the Federal Reserve will be audited, stories like these must hit the mainstream. You can help by sharing this article or any other article out there…

Here’s some of the best articles that I have read on this topic in order of importance, starting with the must-listen audio clip of some of these secret recordings.

The Secret Recordings of Carmen Segarra | Transcript Only (This American Life)

Inside the New York Fed: Secret Recordings and a Culture Clash (This American Life)

So Who is Carmen Segarra? A Fed Whistleblower Q&A (This American Life)

Suit Revives Goldman Conflict Issue (NYTimes//DealBook)

The Secret Goldman Sachs Tapes (Michael Lewis)

Whistleblower’s tapes suggest the Fed was protecting Goldman Sachs from the inside (Vox)

These secret tapes reveal the troubling relationship between the Federal Reserve and Goldman Sachs (Quartz)

P.S. Here’s Goldman CEO Lloyd Blankfein hanging out with friends…

$GS' Lloyd Blankfein & @HillaryClinton at Women Entrepreneurs #CGI2014 dinner hosted by #10KWomen cc @ClintonGlobal pic.twitter.com/P5bc0mGkSc

— GS 10,000 Women (@GS10KWomen) September 24, 2014

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