Secret Tapes Reveal Goldman’s Control Over Regulators
by Mark Melin
September 26, 2014, 2:30 pm
Front line regulator who was fired after she failed to report false information on a government report, unloads 46 hours of fascinating conversations indicating big banks are in control of justice
Secretly recorded private conversations inside the New York Federal Reserve and Goldman Sachs Group Inc (NYSE:GS) are now surfacing that author Michael Lewis is calling the “Ray Rice Video” of the financial world. While the content of the tapes is explosive and deserving of media treatment that was so ferocious it ushered Rice out of a job in the NFL this season, that won’t happen for one simple reason: the general media’s lack of willingness to confront big bank control.
Goldman Sachs
Goldman Sachs control over government regulators
What the audio recordings document for the first time is the utter control large banks such as Goldman Sachs Group Inc (NYSE:GS) have over the government regulators. In the past when rare stories are published of regulatory control they have centered around investigations ignoring evidence damaging to the big banks. These tapes show regulators actively working to cover up big bank deficiencies and instructing front line regulators to knowingly misrepresent the truth on official regulatory reports.
Charges that government reports have been doctored to favor powerful financial interests are nothing new to financial insiders. The high frequency trading debate, and the regulatory report that resulted from the 2010 flash crash, is one such example. It’s the matter of the media covering hot issues that question the financial elite, even when well documented, which is also a challenge.
How deep does big bank control extend? A look into the recent MF Global episode indicates that criminal investigations can be blocked before the suspects are questioned and this fact, in the public domain, isn’t reported.
The very core of democracy is at stake when one group of financial elites can control government to ignore criminal behavior and then influence the press not to report on the issues.
With this as a backdrop, the audio tapes tell an amazing story. That story is being amplified by the one author who might be able to shed some media attention on big bank control as he did on high frequency trading: Michael Lewis.
Michael Lewis shares Carmen Segarra’s story
In a Bloomberg View piece, Lewis tells the story of Carmen Segarra, a principled regulator working at the U.S. Federal reserve until she was fired for refusing to misrepresent the truth.
What Segarra recorded and experienced inside Goldman Sachs and the Fed, initially reported by Jake Bernstein and discussed on the public radio broadcast “This American Life,” shocked her into blowing the whistle, a move that has come at significant personal consequence. (Goldman Sachs, in a response to the issue, engaged in character assignation of Segarra before they even began to address the issues her tape recordings raised.)
With 46 hours of secret tape recordings in hand and personal experiences that should turn heads, Segarra shows that if a regulator inside Goldman Sachs were to observe anything revealing or even alarming, the attitude, expressed to Segarra by a fellow regulator, was “You didn’t hear that.”
Segarra was once told to ignore a Goldman Sachs Group Inc (NYSE:GS) partner saying “once clients are wealthy enough certain consumer laws don’t apply to them.” Although that is one of several fascinating points of regulatory capture on display, it is not the “smoking gun” comment.
What should come as the bombshell, however, is that official regulator reports were falsified to the benefit of the bank. To illustrate, what got Segarra fired from her job as a regulator is that, when asked to change the core facts of a report to reflect a falsehood, she was fired. She wrote in a report that Goldman Sachs did not have a conflict of interest policy after the firm had advised both sides in an energy merger. Her managers asked her to change the report to reflect false information. She refused and was fired.
Lewis contribution in highlighting high frequency trading issue
Michael Lewis has lent his tremendous microphone to the issue. Lewis was successful at bringing the high frequency trading issue into bright public light, influencing positive change. Can the same happen with an issue that is much more serious to democracy – control of the regulatory and justice structures by narrow financial interests?
The media will likely have a say in the outcome. If media attention didn’t focus a blaring light on Ray Rice the football player would be playing the game this weekend. The difference with media attention on the Segarra tapes is likely to put on display the extent to which large banks can influence coverage of its most coveted and prized possession: control over the societal mechanics inside government and the press that are critical to a functioning democracy.
The Segarra tapes deserve to be the “Ray Rice Video” that ushers in a healthy examination of big bank control over democracy. But don’t hold your breath. Sustained questioning of bank power, as Segarra illustrates, is not good for the career of a regulator or most journalists. Below are a few exceptions.
To read Michael Lewis report on the topic, click here.
To listen to public radio’s piece on the topic, click here.
To read Jake Bernstein’s original article on the topic, click here.
To read a detailed Washington Post blog post on the topic, click here.
http://www.valuewalk.com/2014/09/secret-tapes...egulators/
original link courtesy of a friend
by Mark Melin
September 26, 2014, 2:30 pm
Front line regulator who was fired after she failed to report false information on a government report, unloads 46 hours of fascinating conversations indicating big banks are in control of justice
Secretly recorded private conversations inside the New York Federal Reserve and Goldman Sachs Group Inc (NYSE:GS) are now surfacing that author Michael Lewis is calling the “Ray Rice Video” of the financial world. While the content of the tapes is explosive and deserving of media treatment that was so ferocious it ushered Rice out of a job in the NFL this season, that won’t happen for one simple reason: the general media’s lack of willingness to confront big bank control.
Goldman Sachs
Goldman Sachs control over government regulators
What the audio recordings document for the first time is the utter control large banks such as Goldman Sachs Group Inc (NYSE:GS) have over the government regulators. In the past when rare stories are published of regulatory control they have centered around investigations ignoring evidence damaging to the big banks. These tapes show regulators actively working to cover up big bank deficiencies and instructing front line regulators to knowingly misrepresent the truth on official regulatory reports.
Charges that government reports have been doctored to favor powerful financial interests are nothing new to financial insiders. The high frequency trading debate, and the regulatory report that resulted from the 2010 flash crash, is one such example. It’s the matter of the media covering hot issues that question the financial elite, even when well documented, which is also a challenge.
How deep does big bank control extend? A look into the recent MF Global episode indicates that criminal investigations can be blocked before the suspects are questioned and this fact, in the public domain, isn’t reported.
The very core of democracy is at stake when one group of financial elites can control government to ignore criminal behavior and then influence the press not to report on the issues.
With this as a backdrop, the audio tapes tell an amazing story. That story is being amplified by the one author who might be able to shed some media attention on big bank control as he did on high frequency trading: Michael Lewis.
Michael Lewis shares Carmen Segarra’s story
In a Bloomberg View piece, Lewis tells the story of Carmen Segarra, a principled regulator working at the U.S. Federal reserve until she was fired for refusing to misrepresent the truth.
What Segarra recorded and experienced inside Goldman Sachs and the Fed, initially reported by Jake Bernstein and discussed on the public radio broadcast “This American Life,” shocked her into blowing the whistle, a move that has come at significant personal consequence. (Goldman Sachs, in a response to the issue, engaged in character assignation of Segarra before they even began to address the issues her tape recordings raised.)
With 46 hours of secret tape recordings in hand and personal experiences that should turn heads, Segarra shows that if a regulator inside Goldman Sachs were to observe anything revealing or even alarming, the attitude, expressed to Segarra by a fellow regulator, was “You didn’t hear that.”
Segarra was once told to ignore a Goldman Sachs Group Inc (NYSE:GS) partner saying “once clients are wealthy enough certain consumer laws don’t apply to them.” Although that is one of several fascinating points of regulatory capture on display, it is not the “smoking gun” comment.
What should come as the bombshell, however, is that official regulator reports were falsified to the benefit of the bank. To illustrate, what got Segarra fired from her job as a regulator is that, when asked to change the core facts of a report to reflect a falsehood, she was fired. She wrote in a report that Goldman Sachs did not have a conflict of interest policy after the firm had advised both sides in an energy merger. Her managers asked her to change the report to reflect false information. She refused and was fired.
Lewis contribution in highlighting high frequency trading issue
Michael Lewis has lent his tremendous microphone to the issue. Lewis was successful at bringing the high frequency trading issue into bright public light, influencing positive change. Can the same happen with an issue that is much more serious to democracy – control of the regulatory and justice structures by narrow financial interests?
The media will likely have a say in the outcome. If media attention didn’t focus a blaring light on Ray Rice the football player would be playing the game this weekend. The difference with media attention on the Segarra tapes is likely to put on display the extent to which large banks can influence coverage of its most coveted and prized possession: control over the societal mechanics inside government and the press that are critical to a functioning democracy.
The Segarra tapes deserve to be the “Ray Rice Video” that ushers in a healthy examination of big bank control over democracy. But don’t hold your breath. Sustained questioning of bank power, as Segarra illustrates, is not good for the career of a regulator or most journalists. Below are a few exceptions.
To read Michael Lewis report on the topic, click here.
To listen to public radio’s piece on the topic, click here.
To read Jake Bernstein’s original article on the topic, click here.
To read a detailed Washington Post blog post on the topic, click here.
http://www.valuewalk.com/2014/09/secret-tapes...egulators/
original link courtesy of a friend
