Political Irony

I hoped that there would be a huge public outcry about what happened to Carmen Segarra, but so far it has been all but ignored by the mainstream media. Have you ever wondered how all our banks and financial institutions started failing, forcing us to bail them out, and nobody saw it coming? If yes, then read on.

In the aftermath of the “great recession” people wanted to know why the Federal Reserve, which was originally put in place to prevent meltdowns, had failed miserably. The problem was that the culture at the Fed was completely deferential to the banks. To solve this problem, the Fed hired a bunch of expert bank examiners who weren’t afraid to force banks to follow the law. One of them was Carmen Segarra. She was highly qualified for the job, and set out to do exactly what was asked of her to prevent another economic meltdown. Her task was to help regulate Goldman Sachs.

But after only seven months, she was fired. The Fed claimed it was for “performance problems“, but what they didn’t know is that Segarra had run smack into the deferential culture she was hired to change. Knowing this, she had purchased a small audio recorder and had recorded 46 hours of meetings.

Excerpts of those recordings were broadcast on National Public Radio.

The recordings document just how deferential the people whose job it is to regulate the banks can be to those banks. For example, in one meeting a Goldman employee says “once clients are wealthy enough certain consumer laws don’t apply to them.” In other words, laws don’t apply to the rich. After the meeting, Segarra says to a fellow Fed regulator how surprised she was by that statement, and the regulator replies “You didn’t hear that.”

In other tapes, Segarra’s managers try to get her to water down her reports on Goldman, and even try to get her to be more deferential to Goldman, the very thing she was hired to get rid of.

As an article in Bloomberg puts it:

1. You sort of knew that the regulators were more or less controlled by the banks. Now you know.

2. The only reason you know is that one woman, Carmen Segarra, has been brave enough to fight the system. She has paid a great price to inform us all of the obvious. She has lost her job, undermined her career, and will no doubt also endure a lifetime of lawsuits and slander.

So what are you going to do about it? At this moment the Fed is probably telling itself that, like the financial crisis, this, too, will blow over.

In the aftermath of the broadcast of these tapes, Senators Elizabeth Warren and Sherrod Brown both called for full congressional hearings.

With so many politicians in the pocket of the big banks, do you think we will get these hearings?

Only if we insist.