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United States of Bankers

Did you hear the amazing story over the weekend from This American Life, about the secret recordings that a Federal Reserve banking regulator made of meetings she had inside the New York Federal Reserve after she began to get pushback within the office for wanting to, you know, regulate the banking industry. Jake Bernstein and Brian Reed are the reporters. Carmen Segarra is the ex-regulator (she was fired). Excerpt:

Jake Bernstein: This surprised Carmen because it seemed premature. They were only at the beginning of their factfinding. They’d requested documents and minutes of meetings that Goldman [Sachs] still had to give them. They were federal regulators. Their job was to ask questions and demand answers…and yet these colleagues sounded almost apologetic about it.

Unidentified man (on the recording): I would add to his comments in that I think we don’t want to discourage Goldman from disclosing these types of things in the future, and therefore maybe you know some comment that says don’t mistake our
inquisitiveness, and our desire to understand more about the marketplace in general, as a criticism of you as a firm necessarily. Like I don’t want to, I don’t want to hit them on the bat with the head, and they say screw it we’re not gonna disclose it again, we don’t need to.

Jake Bernstein: Wait a second, you guys are the Federal Reserve, doesn’t Goldman have to give you what you ask for?

Carmen Segarra: Absolutely.

Jake Bernstein: So where’s he coming from?

Carmen Segarra: A place of fear.

Jake Bernstein: Fear of ticking off Goldman. Though Carmen couldn’t imagine why
anyone at the Fed would be afraid.

Carmen Segarra: The Fed has both the power to get the information and the ability to punish the bank if it chooses to withhold it. And some of these powers involve criminal action. So there’s no reason to be afraid.

Brian Reed: Did you get the sense that other people around you were taken aback by that comment at the time, or did that seem like not such a strange comment for someone to make?

Carmen Segarra: No, I think business line specialists were very much in agreement with that comment.

Unidentified man: Don’t mistake our inquisitiveness, and our desire to understand more about the marketplace in general, as a criticism of you as a firm necessarily.

Carmen Segarra: I mean, they were all sort of afraid of Goldman and I think
they were a little bit confused as to who they were working for.

What I was sort of seeing and experiencing was this level of deference to the
banks. This level of fear. And just not really showing a lot of interest in putting
two and two together. It’s not like we would walk out of a meeting and they
would be like “Oh my God, when they said that, what did that mean? Let’s go
research it.” It was like “Oh well, next meeting.”

Brian Reed: I mean the obvious question from what you’re describing is: is that
regulatory capture?

Carmen Segarra: You know, if that isn’t I don’t know what is

Listen to the whole thing. And if you like, here is ProPublica’s print version of the story.

Your country and mine, they say. If conservatives and liberals both can’t stand against this, what good are they?

about the author

Rod Dreher is a senior editor at The American Conservative. He has written and edited for the New York Post, The Dallas Morning News, National Review, the South Florida Sun-Sentinel, the Washington Times, and the Baton Rouge Advocate. Rod’s commentary has been published in The Wall Street Journal, Commentary, the Weekly Standard, Beliefnet, and Real Simple, among other publications, and he has appeared on NPR, ABC News, CNN, Fox News, MSNBC, and the BBC. He lives in Baton Rouge, Louisiana, with his wife Julie and their three children. He has also written four books, The Little Way of Ruthie Leming, Crunchy Cons, How Dante Can Save Your Life, and The Benedict Option.

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