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So who is Carmen Segarra? A fed whistleblower Q&A

Jake Bernstein | 11/1/2013, 6 a.m.
Carmen Segarra outside the Federal Reserve Bank of New York on Oct. 10, 2013. (Nabil Rahman for ProPublica)

Sadly, yes. But it doesn’t have to be that way. There are laws, rules, and regulations already in the books that, if regulators enforced them properly, would go a long way towards fixing this problem.

Some, including Michael Silva, the senior fed official at Goldman at the time of your examination, have cited Goldman’s Code of Conduct as evidence that it had a firm-wide conflict-of-interest policy. Why do you believe that this did not satisfy Fed requirements?

Goldman did not think its Code of Conduct was a firm-wide conflicts-of-interest policy. When we asked for a copy of their firm-wide conflicts-of-interest policy, Goldman did not submit its Code of Conduct to us for our consideration. Goldman was correct not to think so. SR 08-08 [the Fed requirement for firm-wide conflicts-of-interest policies and procedures] and its supporting and related documentation do provide guidance as to the content you would expect to see discussed in a policy. Goldman’s Code of Conduct does not satisfy the requirements and expectations of SR 08-08. Other banks agree with Goldman. At the time, some had adopted both a Code of Conduct, which these banks did not consider a policy, as well as separate conflicts-of-interest policies. My direct management and some of my peers did not think Goldman’s Code of Conduct was a conflicts-of-interest policy. Policies in banks are actually pretty standardized documents, with clear titles and content directly related to the title/purpose of the document, written in a language meant to be understood by every employee at every level.

Does the Fed have the resources to keep up with big banks?

The Fed is self-funded, so yes. The issues are lack of backbone, transparency, thoroughness and perseverance, not lack of resources.

If you had 10 minutes with Janet Yellen [President Obama’s nominee to be chairwoman of the Fed], what advice would you give her?

Stimulus and good monetary policy are keys to getting the economy back on track. Although not as sexy, transparent, thorough, and rigorous supervision, constantly and consistently implemented across all supervised institutions, is key to preventing the next financial crisis.

Goldman says it has overhauled its policies and procedures to manage conflicts. Based on their report, do you think the bank would pass muster now?

The report does not provide enough detail to ascertain whether or not they would pass muster. You would really have to look at the actual policies, procedures, and other supporting elements they say they have implemented and measure them against SR 08-08 before making that determination.

Would you call yourself a whistleblower?

Absolutely!

Article originally published by ProPublica