Elizabeth Warren Calls For Investigation Of NY Fed Over Secret Tapes, reports Sam Levine of Huffington Post. Warren and Brown are calling for this Congressional investigation after hearing recently released secret recording that allegedly reveal discussions showing the central bank deliberately "going light on firms it was supposed to regulate."
Warren and Brown, both members of the Senate Banking Committee, called for an investigation of the New York Fed after Carmen Segarra, a former examiner at the bank, released secretly recorded tapes that she claims show her superiors telling her to go easy on private banks. Segarra says that she was fired from her job in 2012 for refusing to overlook Goldman’s lack of a conflict of interest policy and other questionable practices that should have brought tougher regulatory scrutiny.
“Congress must hold oversight hearings on the disturbing issues raised by today’s whistleblower report when it returns in November, because it’s our job to make sure our financial regulators are doing their jobs,” Warren said in a statement on Friday. “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.”
In an interview with This American Life and ProPublica, Segarra described numerous instances in which she said she alerted her bosses to questionable practices at Goldman. In one instance, she said she alerted a colleague that a senior compliance officer at Goldman had said that the bank's view was that “once clients became wealthy enough, certain consumer laws didn’t apply to them.” Segarra claims that her New York Fed colleagues asked her to ignore the remark and change meeting minutes she had taken, which contained evidence of what the Goldman executive said.
Another internal study from 2009, revealed by these documents, found that the New York Fed, "had a culture where regulators had gotten too cozy to the banks they were supposed to scrutinize and were discouraged from voicing their honest opinions."
The New York Fed rejected these allegations and added that Segarra's termination of employment was based on legitimate cause.
What a great shame and failure it will be if history shows we had all the information available to correct these failures and wrong doings but did not.
Another reasons I support Warren and Brown in their calls for this investigation is that it would be beneficial to show the public what a substantive and useful congressional investigation of a real issue looks like. Otherwise, based on what they've seen from Darryl Issa and "Benghazigate" the younger generations of the voting public may draw the conclusion that congressional investigations are nothing but politically opportunistic grandstanding and a complete waste.
Can you imagine the cynicism and despair such an image of our democratic process could create?