Blowing the Whistle on Goldman Sachs
In an article recently written by Jake Bernstein that appeared on ProPublica.org a former New York Federal Reserve worker, Carmen Segarra, made approximately 46 hours of secret tape recordings of her dealings with Goldman Sachs.
The audio tapes claim to show a lax relationship between the New York Federal Reserve Bank and the financial institutions that it is supposed to regulate. Carmen Segarra was hired by the New York Fed to help provide regulatory oversight.
(Picture shows Goldman Sachs Tower in Jersey)
She was assigned to Goldman Sachs and was a lawyer with 13 years of experience in compliance. However, according to the article in ProPublica she was fired after only 7 months on the job.
According to the story she sued the New York Fed and her bosses claiming she was retaliated against for a negative finding about Goldman. Although the case was thrown out, Segarra apparently made secrete audio recordings of her conversations while at Goldman.
This story highlights the inherent problem that exists in the current financial regulatory system. In an article in Bloomberg, it was explained that it is common practice for regulators to leave their government jobs for much higher paying jobs at the very banks that they were once meant to regulate.
According to a story in Reuters, Elizabeth Warren, a Democrat on the senate banking committee has called for hearings on the tapes after some of the contents have been made public.
In the Reuters article Warren was quoted in an emailed statement saying “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,".
Structural Changes Needed
What is clear is that the banks are the ones calling the shots. Since the Glass-Steagall act was repealed in 1999, which separated commercial banking from investment banking, financial institutions have become mega companies with too much power and control over the financial markets.
The truth is that nothing will likely change until there is a major crisis that threatens the very existence of some of these mega banks. So for the time being the average person is probably best served to limit their exposure with the biggest global banks.
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