Everything you suspected about the relationships between banks and regulators... The reporter, Jake Bernstein, has obtained 46 hours of tape recordings, made secretly by a [Federal Reserve System] employee, of conversations within the Fed, and between the Fed and Goldman Sachs. The Ray Rice video for the financial sector has arrived. Its an extraordinary document. There is not space here to do it justice, but the gist is this: The Fed failed to regulate the banks because it did not encourage its employees to ask questions, to speak their minds or to point out problems. The report quotes Fed employees saying things like, until I know what my boss thinks I dont want to tell you, and no one feels individually accountable for financial crisis mistakes because management is through consensus. [David] Beim was himself surprised that what he thought was going to be an investigation of financial failure was actually a story of cultural failure. The job right from the start seems to have been different from what [Carmen Segarra] had imagined: In meetings, Fed employees would defer to the Goldman people; if one of the Goldman people said something revealing or even alarming, the other Fed employees in the meeting would either ignore or downplay it. For instance, in one meeting a Goldman employee expressed the view that once clients are wealthy enough certain consumer laws dont apply to them. After that meeting, Segarra turned to a fellow Fed regulator and said how surprised she was by that statement -- to which the regulator replied, You didnt hear that. - Michael Lewis in Bloomberg View Full interview w/ Segarra: bit.ly/1uTzGHs
Posted on: Sat, 29 Nov 2014 02:14:49 +0000
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