The Federal Reserve Bank of New York said it “categorically rejects” allegations made by a former examiner at the Fed bank who said 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” on Friday 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 nonprofit journalism organization ProPublica, which partnered with the radio program, also published its own story.
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, who didn’t immediately respond to a request for comment, 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 whistleblower protections of the Federal Deposit Insurance Act. Segarra is appealing dismissal of her suit.
“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, 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.”
The New York Fed is one of 12 regional banks that form the Federal Reserve System. Its examiners monitor large New York-based banks such as Goldman, Citigroup and JPMorgan Chase. The Richmond Fed supervises Charlotte-based Bank of America.
During the financial crisis, former New York Fed Chairman Tim Geithner was involved in the sale of Charlotte-based Wachovia as it verged on failure. Geithner supported a deal with Citigroup, but former Federal Deposit Insurance Corp. Chairman Sheila Bair backed a competing offer from Wells Fargo, which ultimately prevailed. Observer staff writer Rick Rothacker contributed.