Ex-Goldman banker barred from banking for leaking confidential Fed info

A former Goldman Sachs (GS) employee will never work in banking again, after pleading guilty to charges of stealing confidential information from the Federal Reserve Bank of New York.

On Thursday, the Fed permanently barred Rohit Bansal, who was able to obtain confidential information from the New York Fed because he was an employee of the New York Fed before going to work at Goldman Sachs, from working in banking as part of his guilty plea for misdemeanor theft of confidential information from the Federal Reserve.

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New York Fed Chief Calls for Improved Wall Street Culture

A prominent Wall Street regulator on Thursday continued to press senior bankers to clean up the culture of their firms so that they can avoid the sort of recent scandals that have undermined the reputations of big banks.

William C. Dudley, the president of the Federal Reserve Bank of New York, told bankers who had gathered for a conference on ethical culture at the New York Fed, “I think your focus should be less on the search for bad apples and more on how to improve the apple barrels.”

Mr. Dudley started his push to improve banks’ culture two years ago with a speech that called the banks’ ethical lapses a “critical problem.” Skeptics have wondered whether the New York Fed has the authority or desire to do what it takes to change behavior on Wall Street. The New York Fed failed to address dangerous weaknesses in big banks before the 2008 financial crisis. And episodes since the crisis, like the so-called London Whale trading scandal at JPMorgan Chase, have raised questions about the effectiveness of its regulation.

Still, when it comes to culture Mr. Dudley appears to have made some progress. He has helped assemble an international effort to clean up the banks, under the Group of 30 nations, and on Thursday he had the support of Christine Lagarde, the managing director of the International Monetary Fund, and Stanley Fischer, the vice chairman of the Federal Reserve, both of whom were at the conference.

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Meet The New York Fed’s Latest Director: The Ex-CEO Of Another Bailed Out Bank

The Federal Reserve was supposed to serve the nation, however as even Bloomberg observes today, ended up “steamrolling” Main Street. One reason why: directors such as this one.

Presenting former Morgan Stanley CEO, James Gorman, whose former employer got a $107 billion loan from the Federal Reserve to avoid implosion:

The Federal Reserve Bank of New York announced that James P. Gorman, chairman and chief executive officer of Morgan Stanley, has been elected a Class A director representing Group 1, which consists of member banks with capital and surplus of more than $1 billion. Mr. Gorman will serve a three-year term beginning January 1, 2016.

Mr. Gorman has been chief executive officer of Morgan Stanley since January 2010, and chairman since January 2012. Previously, he was co-president of the firm, which he joined in February 2006.

Before joining Morgan Stanley, Mr. Gorman held a succession of executive positions at Merrill Lynch. Prior to this he was a senior partner of McKinsey & Co. and began his career as an attorney in Melbourne, Australia.

Mr. Gorman serves as a member of the Federal Advisory Council to the Federal Reserve Board of Governors and as co-chairman of the Partnership for New York City. He is also a member of the Board of Overseers of the Columbia Business School, the Board of the Institute of International Finance, the Monetary Authority of Singapore International Advisory Panel, the Council on Foreign Relations, and the Economic Club of New York. He formerly co-chaired the Business Committee of the Metropolitan Museum of Art and was on the Board of the Securities Industry and Financial Markets Association in Washington, D.C., serving as Chairman in 2006.

Mr. Gorman holds a bachelor’s degree and law degree from the University of Melbourne, and an MBA from Columbia University

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Wall Street Shocked As Feds Bring Criminal Case Against Goldman Banker Over Fed Leaks

Zerohedge:

As we previously detailed, this is what happened in July 2014:

From his desk in Lower Manhattan, a banker at Goldman Sachs thumbed through confidential documents — courtesy of a source inside the United States government.

The banker came to Goldman through the so-called revolving door, the symbolic portal that connects financial regulators to Wall Street. He joined in July after spending seven years as a regulator at the Federal Reserve Bank of New York, the government’s front line in overseeing the financial industry. He received the confidential information, lawyers briefed on the matter suspect, from a former colleague who was still working at the New York Fed.

As a reminder, the NY Fed is also the world’s biggest hegde fund, as it is the place where, at Liberty 33, the Fed’s market moving operations are executed. It is also where the legendary PPT is located. Continuing:

The previously unreported leak, recounted in interviews with the lawyers briefed on the matter who spoke anonymously because the episode is not public, illustrates the blurred lines between Wall Street and the government — and the potential conflicts of interest that can result. When Goldman hired the former New York Fed regulator, who is 29, it assigned him to advise the same type of banks that he once policed. And the banker obtained confidential information, along with several publicly available facts, in the course of assignments from his bosses at Goldman, the lawyers said.

And now, a year after Carmen Segarra’s whistleblowing over The New York Fed’s regulatory capture by Goldman Sachs – amid 47.5 hours of secretly recorded tapes, a rare criminal action on Wall Street appears imminent, as The New York Times reports, against a former Goldman Sachs banker suspected of taking confidential documents from a source inside the government…

The banker and his source, who at the time of the leak was an employee at the Federal Reserve Bank of New York, one of Goldman’s regulators, might plead guilty to misdemeanor theft charges rather than fight the case at trial,according to lawyers briefed on the matter who were not authorized to discuss private deliberations. The men, who were both fired in the wake of the leak, wouldface up to a year in prison if they accept the plea deals.

In a statement, a Goldman spokesman emphasized that the banker worked for the firm for less than three months, and that the bank “immediately began an investigation and notified the appropriate regulators” once it detected the leak. Nonetheless, the bank is expected to pay a significant price for the leak.

Under a tentative deal with New York State’s financial regulator, the lawyers said, Goldman would pay a fine of $50 million and face new restrictions on how it handled delicate regulatory information. The settlement would also force Goldman to take the rare step of acknowledging that it failed to adequately supervise the former banker – thrusting the bank back into the spotlight just as it was shedding a popular image as a firm willing to cut corners to turn a profit.

Dismissal of Bank-Examiner Case Against New York Fed Is Upheld

A U.S. appeals court on Wednesday affirmed a district court’s earlier dismissal of claims by former Federal Reserve Bank of New York bank examiner Carmen Segarra against the regulator and some of its employees.

In the decision, the Second U.S. Circuit Court of Appeals in New York concluded the claims by Ms. Segarra against the New York Fed and the executives were “without merit.” It said she couldn’t maintain her claims against the defendants under banking whistleblower protection laws.

A lawyer for Ms. Segarra said she disagreed with the appeals court decision and that they are “considering our legal options.”

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New York Fed attacked watchdog’s JPMorgan ‘Whale’ probe

The New York Federal Reserve Bank sharply criticized an internal probe carried out by the Fed’s inspector general on the handling of J.P. Morgan’s “London Whale” case, according to a full version of the probe released on Thursday.

The New York Fed said the inspector general was wrong to criticise examiners for failing to prioritise exams of J.P. Morgan’s chief investment office, according to the report.

The full report reveals an unusual and barbed clash between the Fed’s New York branch and its internal auditor. The New York Fed – the central bank’s eyes and ears on Wall Street – faced criticism on several fronts last year. The most damaging was the disclosure of secretly recorded tapes that portrayed New York Fed examiners as hesitant to demand answers and changes from Goldman Sachs officials.

The Fed’s Office of the Inspector General released a 4-page summary report in October that criticised the New York Fed’s handling of the huge JPMorgan credit derivative trading losses in Europe in 2012. The trading position grew so large that traders referred to it as the “London Whale.” The losses were connected to the bank’s chief investment office and ballooned to $6.2 billion (4 billion pounds) by the end of that year.

The 77-page report released on Thursday marked the first time the New York Fed’s criticism of the probe was made public. The initial report contained redactions and was released after freedom of information requests from the media.

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When Goldman Sachs Writes The New York Fed’s Press Releases, Then All Is Lost

Wow, the plot thickens with the Goldman-NY Fed relationship..

From the FT:

As the financial crisis raged in September 2008, Goldman Sachs and Morgan Stanley sought sanctuary from the Federal Reserve.

The last two big independent broker-dealers were allowed to become bank holding companies, giving them access to government liquidity that could keep them afloat.

Goldman drafted its own statement, quoting Lloyd Blankfein, chief executive, as saying: “We believe that Goldman Sachs, under Federal Reserve supervision, will be regarded as an even more secure institution.”

According to people familiar with the matter, Goldman then drafted another release and sent it to the New York Fed. This one was to be used as the central bank’s own statement.

Watch Elizabeth Warren Tear Into the New York Fed Chief Over Agency’s ‘Regulatory Capture’

New York Fed chief Dudley defends bank supervision system

New York Federal Reserve President William Dudley defended the system for supervising major banks, saying it has been dramatically improved and made safer since the 2007-2009 financial crisis.

In testimony prepared for a Senate Banking Committee hearing on Friday but released on Thursday, Dudley said “it is undeniable that banking supervisors could have done better in their prudential oversight of the financial system” in advance of the financial crisis.

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The Carmen Segarra Tapes

Carmen Segarra secretly recorded 46 hours of audio while embedded as a bank examiner at Goldman Sachs between November 2011 and May 2012. These are some of her recordings.

On Sept. 26, ProPublica, in partnership with the radio program This American Life, revealed that a bank examiner for the Federal Reserve Bank of New York had secretly recorded approximately 46 hours of audio while on the job. The stories focused on what happened to the examiner, Carmen Segarra, and what she witnessed while embedded at Goldman Sachs between November 2011 and May 2012.

For the first time, the public could hear regulators supervise a powerful bank in real time. Sen. Sherrod Brown, D-Ohio, echoed the opinion of many who said they found the recordings troubling. “It kind of emphasizes what we have thought all along, that the regulators are too cozy toward the industry they are meant to police,” said Brown.

The New York Fed hired Segarra as part of a wave of new expert examiners to supervise banks so big their failure could torpedo the economy. Soon after she started, Segarra began experiencing conflicts with her colleagues over differing views of what they were seeing at Goldman Sachs. She was fired after only seven months. A week before her termination, her supervisor tried unsuccessfully to get her to change her findings about Goldman’s conflicts-of-interest policy.

The New York Fed says Segarra’s firing was unrelated to her supervision of Goldman. She filed a lawsuit against the New York Fed and her supervisors in 2013. It was dismissed without a ruling on the merits and is on appeal.

Here’s some of the audio that was released. Check back — we will be updating this page.

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