Risk & Compliance

Fed Too Soft on Big Banks: Warren

Controversial audio tapes of a New York Fed meeting lead Elizabeth Warren to call for a Congressional investigation.
Iris DorbianSeptember 29, 2014
Fed Too Soft on Big Banks: Warren

Following the reports of two news outlets of audio tapes that supposedly reveal how the New York Federal Reserve interfered with one of its investigator’s efforts to monitor Goldman Sachs, Massachusetts Senator Elizabeth Warren is urging Congress to investigate the matter.

Democratic Senator Elizabeth Warren of Massachusetts.

Democratic Senator Elizabeth Warren of Massachusetts.

CNNMoney.com says that Warren made her charges on Friday after learning about secretly taped recordings of meetings between Carmen Segarra, a Fed investigator who was assigned to regulate Goldman in 2011 and 2012 (she has since been fired), and her colleagues. According to the news outlets that heard the tapes, This American Life and ProPublica, the tapes “showed Fed officials pushing back on [Segarra’s] efforts” to criticize Goldman Sachs.

Warren says the tapes are disturbing and that Congress needs to investigate this “because it’s our job to make sure our financial regulators are doing their jobs.”

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CNNMoney reports that Segarra is using the tapes as evidence to bolster her lawsuit against the Fed for wrongfully terminating her after only seven months.

When Segarra was working for the Fed, Goldman Sachs was under scrutiny for serving as an adviser on a deal while also owning a “significant” stake in one of the companies involved in the transaction.

In a statement about Warren’s charges and Segarra’s lawsuit, the New York Fed denied wrongdoing. Further it maintained that Segarra was let go due to job performance issues.

Goldman also entered the fray by refuting Segarra’s claim that that it didn’t have a conflict-of interest-policy. The investment bank also added that Segarra had “previously applied for jobs at Goldman but been turned down.”

As CNNMoney.com notes, Warren’s involvement in this case follows her history of taking to task regulators for protecting big banks at the expense of consumers.

Source: CNNMoney.com Elizabeth Warren wants to probe if Fed is too close to big banks

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