Tags: Federal Reserve | bank | lawsuit | supervision

New York Fed Denies Allegations of Bank-Supervision Lapses

Friday, 26 Sep 2014 01:26 PM

The Federal Reserve Bank of New York said it “categorically rejects” allegations made by a former examiner at the Fed bank that her colleagues there were too deferential to the institutions they regulated.

“The New York Fed works diligently to execute its supervisory authority in a manner that is most effective in promoting the safety and soundness of the financial institutions it is charged with supervising,” the regional Fed bank said in a statement posted on its website Friday.

The radio program “This American Life” today released the transcript of a broadcast that includes excerpts of conversations it said were secretly recorded by Carmen Segarra, the former bank examiner, with some of her colleagues and her supervisor.

The transcript includes excerpts of discussions between Segarra and another official, Michael Silva, who was then a senior Fed supervisor with oversight responsibilities for Goldman Sachs Group Inc.

Segarra told Silva that Goldman Sachs had no policy governing conflicts of interest, while Silva said the bank did have such a policy.

Segarra didn’t immediately respond to a request for comment left on her voice mail. She sued the New York Fed last October, alleging she was fired in May 2012 after refusing to change her findings on the conflict-of-interest policy.

U.S. District Judge Ronnie Abrams in Manhattan dismissed the case in April, ruling that Segarra failed to make a legally sufficient claim under the whistle-blower protections of the Federal Deposit Insurance Act. Segarra is appealing dismissal of her suit.

‘Comprehensive Approach’

“Goldman Sachs has long had a comprehensive approach for addressing potential conflicts,” the bank said in a statement. It said a “quick Google search” shows “publicly available Goldman Sachs documents outlining the management of conflicts.”

In its statement Friday, the New York Fed said Segarra had worked at the bank for less than seven months and had no previous experience as an examiner.

“Further, she demanded $7 million to settle her complaint,” according to the statement. “The decision to terminate Ms. Segarra’s employment with the New York Fed was based entirely on performance grounds, not because she raised concerns as a member of an examination team about any institution.”

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The Federal Reserve Bank of New York said it "categorically rejects" allegations made by a former examiner at the Fed bank that her colleagues there were too deferential to the institutions they regulated.
Federal Reserve, bank, lawsuit, supervision
357
2014-26-26
Friday, 26 Sep 2014 01:26 PM
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