>> former federal reserve examiner discusses the close relationship between the new york federal reserve and the banks they regulate. after that the putative prize-winning historian discusses his new book on the founding fathers and coming up later tonight after words mac with nebraska senator ben sasse. i'm pleased to introduce carmen segarra and an attorney in private practice and cofounder of apron and hair.

she attended harvard university, columbia university and cornell law school and has worked at citigroup. when carmen segarra took a job at the federal reserve bank of new york she believed she would be monitoring the big banks behavior in order to avoid another financial crisis. instead, she encountered a federal reserve and affecting and holding the banks accountable and began secretly recording her meetings. recordings became the basis of the american life episode. she chronicles her experience exposing the relationship between the big banks and set up to regulate them. william cohen author of money and power came to rule the world and writes a noncompliant whistleblower carmen segarra detonates a metaphorical explosive device inside the previously impenetrable façade of the powerful federal reserve bank of new york and in a

gripping and highly personal narrative she reveals the depths of the shameful regularity, the existing between the fed and wall street banks it is meant to supervise and the high price she paid. please join me in welcoming carmen segarra. [applause] >> i'm going to rearrange this a little bit.

maybe if you have a little stool i can stand on. i have one at home i use it to climb everywhere. let me take this opportunity to thank each and every one of you today. i know this is a busy place and there's a lot of important issues and events that demand our attention so it is grateful that you've been here.

i am not 6-foot seven but thinking my god it looks different in here. i don't like it. it throws me off and i would rather be down there. let me go over my notes. i did write something that i feel more comfortable speaking about this personally and i want to leave plenty of time for questions. before we start i do have a tendency to speak at a fast so if i'm getting a little bit too fast, just go like this and then i will slow down. again it's normal because i get really nervous for these types of things because again i didn't ask to be in this position. and i never thought i would be

in this position at all, so it's quite a surprise for me to be here and as part of the lovely introductions, thank you so much. indeed i joined the federal reserve about three years after the financial crisis. i spent most of my career before joining working at the federal reserve in the private sector and there's all of these when you work at a bank which is important because if you are to portray the image of stability and trust to the people that used the bank but in reality i'm here to tell you you instead of cleaning up messes for $10 an hour my job was to clean up for more than that per hour.

i would walk into the federal reserve and that they had made it clear there was a message needed to be cleaned so they were expecting i'm going to see the mess and there were days he would have executives constantly lying and misrepresenting and speaking the way through meetings. they were trying to suppress evidence in a systematic way and expunged from the record. this is serious this is evidence that could be used by other regulators and my colleagues and

even by the federal reserve to hold goldman sachs accountable which is their job as the banking supervisors. so i didn't have to try very hard. i just have to sit there and watch and take notes. fixing the problem was of course the issue. how do you go about this and how likely is it that you will be effective at fixing it and it became clear to me within a couple of months this was a mess that was beyond my ability to fix, and also beyond the ability of my colleagues who have joined as well from outside of the regulatory world. i think it was for the ability to fix. i think within a couple of months i have already seen how

he was in charge of the supervision and set up a parallel team of regulators that were sort of side-by-side supervising banks but there were others that replicated in the bank's. first we were not sure they were just jobs people were being given the time and space to lead othemeetother jobs outside of td and to the sentiment it's no fun to lose your job, but it became very clear people were not going anywhere. and that's sort of snowballed into other things so then i thought they were leaving and

they were not so than they are sitting there and you watch your colleagues or to try to stop and in a very basic way i mean we are not talking about points of laputtingthe flop are difficulto understand then you see these other regulators stopping the accountability from happening. then the moment came i was asked to delete evidence from somebody that's spent a career cleaning up messes is not surprising. i went to law school. i'm not saying that it happens but you do get asked. of course i've done this before.

i sort of go through this in the book that this was coming from above and at that point i thought i'm getting way in over my head and then i started to get legal advice. i have professionals i respect and i don't know if they respect me tha but i know the humor me. start preserving the evidence and start recording and i knew

about the one because i'm a lawyer but it was just confronting on that basis and a sort of maditsort of made me pa. so then i decide i go through in the book and it was time to preserve the evidence and it made a very compelling indicates to me. i agreed with them and i thought if nothing else it will help me do my job better. and i'm hoping every day that things will change and that i will be able to find ways to work with people to turn things around. there was still hope from my perspective to try to turn things around.

i was protesting around the world and whether you agree or disagree, they very much a point. it was clear, and enough articles have made it out the fed was asleep at the wheel and things need to change, so there was pressure to deliver. so it became clear that this just wasn't going to happen. i will walk you through the process how it became clear. once again i was asked to take a pic and expunged from the record evidence that it was at that point i was fired. and i think at that point i had to make a decision what do you do. i think from a personal

standpoint. it's not only because i couldn't but because it meant a lot to me and it sent a signal to the market i'm going to be a hard worker which i am and so i thought i will just get another job. what kept me thinking and going back to this was i started to share my story with my colleagues and allies and friends and they were absolutely horrified. this is important for the country, not just for you. as a society we believe that the fed is above this and we have entrusted them with supervision for a reason and the story that

you are telling u is very compelling and it shows the opposite, so there was a lot of creative reflection. it's upsetting to my personal life. this is what is happening at the same time and here i'm thinking should i plan a wedding. [laughter] then the question becomes how to do both at the same time, which is what i ended up doing. of course i call them the allies in the group they were just incredibly helpful and supportive.

so then nothing changed. after the congressional hearing after you read this book you should go back and sort of look at the testimony. it will be an eye-opening experience after you read the book. i will just leave it at that. but then you have janet yellin looking to continue to advocate for both transparency and oversight over the federal reserve. you have to promote it. a number of regulators that were working with me in suppressing

evidence. what also happened is my colleagues who had come in just like neat trick to help this program they are not working at the fed anymore or the other regulatory agencies where they were working and that is a problem. so it is important to tell the full story because i think i have a lot of requests from every network that you can name and every reporter you can imagine they wanted to talk to me and work on the stories together. to explain the depth and scope of this corruption that has rotted away inside of the federal reserve you really need that format digital the story in a detail that would create a compelling case more than any

words i could say. and i try to take you through that journey what it's like to sit there and listen to these people and say the things they say in the way that they see them. what are we going to do to fix this problem. i think however the first step we need to do is understand the mess that we are in and take it

seriously. i don't think we have that much time left before the next crisis to fix this problem and it's better to fix these when the sun is still shining because it is going to be tough. this is a problem that impacts us all. this is an american problem that has worldwide consequences. they are not doing their job.

it's not acceptable and it shouldn't be too anybody that uses the u.s. dollar i think i will leave it at that for now. i know it isn't a long talk that i want to open up to questions and answers. [applause] when wall street writes its own rules the most important

sentence one of the conservative advisers says i don't know what happened. i'm kind of a cynic the more things change the more things sound the same. this audience didn't have to worry that the average person that gets on the bus every day, they are not going to make it. as long as you don't see any profound change should the need for change. >> that is a very profound question. i do think everybody in this room has to worry. the way that i see it, i am older than i look the way that i see it, one day i'm going to be 82-years-old and i don't want to be sitting in my apartment afraid to go outside because

people outside are starving and hungry and have no hope for the future. i want to be that media folks are way to the park and sit there and watches the 11-year-old and a 10-year-old make fun of her because she can't ride the hover board. that isn't going to happen unless we start taking supervision seriously and until we start making sure that we take the solutions seriously and restore america's confidence in the banking system. i think we are tired and we agree with you we are tired of these casual spots on the rest. we know that these casual spots on the rest don't work and the average american knows has pointed out in the article special interests have led to rewriting some of its own rules. having said that, it isn't the

absence of the loopholes but it's the enforcement of the rules that there are. these are basic things we are talking about. we have to state regulators and we need to look at potential options that are not based upon the rest. the other option i would like to see that on the table is consolidating all of these other supervisory bodies into one and really separating the roles from the monetary policy.

they don't have the appetite or the talent to do with supervision work and i think my book makes that clear. that should be left up to the professionals, the agencies that actually do it and are trying to do it and i do agree with you we do need to re- staff the agency's house while and the book focuses on this because it is a personal story, and i'm hoping that it will connect with people. but that doesn't mean that this is an isolated problem. one person ca can't fix this. it is a cultural systemic problem. it's going to take us starting in our daily lives to stop rewarding bad behavior. everybody can do this in their daily life. a lot of you have children or

grandchildren. that's why it is going to take ten or 15 years. i don't have any faith or confidence of the current generation of people who are working there are going to be able to. but there's something we can do in our daily lives to turn back to that. >> i'm just wondering if you think there is a big cultural mentality between new york and here and maybe tolerat it may bf this behavior and also is ben bernanke a big part are not necessarily? scenic those are good questions. to be honest, i've been there before but i haven't been there enough to know enough about the

cultural differences. i can tell you there is a big difference in terms of people who work in the private sector and what i encounter working on the regulatory sector. when you are working for a particular bank and you want your bank to be trusted and have more customers it seems everybody is better off. people from the industry were shocked to see how it was for goldman and how unfair it was for all the other bank and the systemic risks in having a bank that could go about its business without having to comply in the american rule of law. what does that mean and what kind of a risk does that create. so i can tell you the difference in those cultures but not about

dc. what do i think? >> i confess i have not read your book. >> i haven't read it either. [laughter] >> can you be a little bit more concrete in the examples and can you give concrete examples because at least i speak for myself and i don't know materially enough what you are referring to, and the other part is what does the system of litigation how is that possible?

>> i will try to answer the first one very likely. one of the drawbacks of being a lawyer having written such a well-documented book is to be careful in how you talk about this in the book because you don't want to inadvertently end up in a situation where you are saying something different so i'm not going to go into a great detail about anecdotes, but i will point to a couple of thin things. there was a meeting where we were discussing the issues with respect to money laundering and in that meeting you see one of these regulators who went on to be motivated and recruiting me to sweep this under the table

and help to do something about stopping the regulators from making them com comes out of moy laundering rules. when you think that the concept of money laundering we're talking something simple, like you are supposed to have your client's data on the file. if this person applies and wants to open an account you get there first name, last name, what they do, how much money they have. this is basic stuff. so you have a foreign regulator. one day i want to turn them over and then when i turned them over there was a lot of stuff that wasn't there. this is not a complicated thing. imagine putting your money into a bank where there vito are no

facts to that. it's upsetting to be told it's not a big deal but they didn't t get over this basic deal. it's not an opinion. this is the kind of stuff nobody outside of the industry talks about because it is so basic. so, that is an example. and it was for real. i was sitting there listening to this person with another colleague who was interrupting this person saying they had the same thing in japan and switzerland. they were getting upset and deflated because this person sitting next to me was ruining her party, raining on her parade not letting her do her job, so

that is one example. and the book walks you through a lot of those examples. you don't need to be a lawyer or an economist. for the second question in terms of the motivators, i think that is an excellent question because i didn't really understand why they did it. i will put it this way. if you want to be a lawyer, you will become a lawyer. i will put it this way the pay was very comparable to what i was making before. it wasn't that much of a difference. if you were to measure by the hour, i was making more as a regulator than i was in the financial industry sector because i had to work 15 hours a day, seven days a week sometimes than as a regulator i didn't. so, right off the bat per hour, i am making more.

what motivates somebody to deliberately not do their job, i don't know. i'm not that kind of person i wouldn't be able to go home at night and sleep to get paid not doing my job. i think it is a matter of speculation. one of the things i remember was the sense of fear, people live in fear. you see how they are afraid of their supervisors and you realize they are afraid of common facts. the book walks you through the scene where there is a regulator that got fired from another regulatory just as goldman sachs pushed for it and they pushed

the other regulatory agency to do it. some of them are afraid to do their jobs. to tell other people they have circumstances with grandchildren to pay for. there are circumstances where they find themselves afraid to lose their jobs and what that is going to mean in their daily lives. there is no one answer. >> thank you very much for everything you said so far. you said in the beginning you referred to paul volcker but now thanks to paul volcker there are certain oversight mechanisms that were not at the time of the

food program you are aware of the inquiry. so i would be interested to follow up on the questio a quess just asked if you could say something about what kind of mechanisms for oversight and ethics you had to deal with when you brought you talked about whistleblowing but that is a very broad general statement. what is in place already that doesn't work? >> that is a good question. i would say this. when i arrived they were just beginning to revamp those mechanisms saying we have an ethics officer and you get fired before you contribute to those mechanisms. so, from a technical standpoint i did trigger it and i informed

my supervisor this is happening and we need to discuss. then i was fired. i was able to create the record and another one of the things i talk about is a little bit in the bucket i book it is exactlyt happens when you are trying to tie all that how you manage with respect to that mechanism. we are going to call the fed and say we have all this evidence. do you want it back, and they didn't want it back. they didn't want to do anything about it.

>> you referred to to bringing together other bodies such as consumer financial protection bureau that is very weak as this right now. what is the stronger oversight mechanism for whatever you put in place, isn't that -- >> this is an enforcement issue. the mechanisms are there and the statute of limitations. they can be used to hold up the reserves and the employees accountable. they have strong statutes of limitations. prosecutors can choose to enforce them. question though is what is the

appetite for enforcement and you have the american people waiting for something to be done, tired of watching haphazard slap on the wrist and wondering what do we do when our government is failing us on everything. one of the things i talk about in the book is what happens when the judge that gets assigned to your case used to work with the lawyer representing the federal reserve and is married to a lawyer that represents goldman sachs? this is what happens. and then 24 hours later something dismisses the case. three quick comments and then a

question. >> take your time. i know what it's like to be nervous. >> i just have so many questions and comments. [laughter] >> unless we get involved and ask the right questions there was a time people used to go to jail for white collar crime. to the best of my knowledge not very many people went to jail during this time, that grew into so many peoples lives. the justice department even under the obama administration voted for this guy.

is there anybody out there working on this issue that you think could give leadership to focus attention and create some popular support for meaningful change? so i'm asking for the presidential candidates. >> that is a tricky question to answer because to be perfectly honest one of the things that happens is you disconnect from the rest of the world. i wrote every word in that book. i really had to tap int into sks i haven't used since college. i ended up writing 600 pages. so to be honest, and that is and to give you the runaround to the question. i am legitimately in terms of the book wasn't finished until a short time ago.

i had to jump into legal projects that slowed the rest of my time so i'm not caught up in that and i can tell you this. as citizens we need to start educating ourselves and i think, i hope this book will help people in terms of understanding. i wrote it on purpose you need a law degree in economics degree. the one missing doctor in the ae conversation is the american people. i think american consumers are the most powerful in the world. i think we also need to be realistic. we cannot sit around and wait. we have to start doing things and i think that putting pressure to strip the supervision away from the fed to start putting pressure to hold

them accountable if they start. how the system is working or not working more importantly and how to hedge from that. and it's become polarized and the environment it feels like there's no room for the issues that matter to everyone. and this is one that should matter to everyone and regardless of what's going on here in dc, i can tell you outside of dc, people get this. the solutions people are going to start implementing once they

lose hope are going to be detrimental to the u.s. into the dollar. so i think we are getting to that point were i hope we are getting to the point people will pick this up and realize we need to put politics aside. we all need to work together towards fixing. a lot of people think the federal reserve bank of new york is a public entity. most people don't know that.

consequentially, i am wondering if after the financial mess some updated ethical imperatives or guidelines have been adopted because it's a revolving door and a lot of people are intertwined. in a private entity which is the test?

has that changed the perspective into the procedures inside the bank? i think those questions by themselves are pretty complicated. they are not public entities and again that is why i started by saying we need to put pressure and strip the supervision away. the mechanisms are there to strip the supervision powers away. all my life before joining the fed every one of those picked banks had issues but the level

of competency and the commitment to setting up the compliance programs. was absent of the federal reservat the federalreserve ande don't leave the room thinking there is any shred of hope that these people get it, they just don't end of the book makes that very clear. this serves to make the point. a few months or i think maybe it could have been as much as a year, a little bit less than a year there was a story published in which he hadn't disclosed. he had a conflict with respect to a family member working at

another bank. i go back to the point it's like a slap on the wrist. it's an enforcement issue. it's not a question of ethics rules. these things are common sense. i am not sure that having -- >> there are thousands in the u.s. which means there are a lot of legal offices out there that are trained to do this. there is no need to have a revolving door. i think if you are going to go down that path, you can make this sort of creative power track once you are a regulator you are always a regulator and that's it. if you don't have the cultural appreciation for it and the

importance of upholding the rule of law to get the credibility to the banking system then you will end up where you are right now. so, i think the problem isn't more or less i think it is deeper than that. it is an enforcement problem and needs to be a commitment that will trickle down to the community not using bad behavior and the state not rewarding bad behavior and employees of the federal level. i don't think more or less that that will make a difference. >> in the question and the comment i guess i forgot the financial crisis in 2009 was

triggered by all these mortgag mortgages. does the new york fed have any regulatory power over that kind of thing because of course timothy geithner was the head of the new york fed and then became the secretary o secretary of thy and after the crisis and during the crisis another goldman sachs president was the secretary of the treasury because it is built into the system.

i wondered if you could comment. >> as an industry i could see that coming. that's just the bottom line. they have an enormous amount of power in one of the things i talk about in my interview is that i was afraid coming in three years after the financial crisis is put ourselves back there.

it's going to be safe to learn, but no. but it was the opposite. iwith the new people who can't the profession by us and not play than. they choose not to exercise it elaborately and that is not acceptable. it can kind of changed the landscape.

i wonder if you can comment on these back channel efforts to get them to change the international currency that seems to be picking up speed. that seems to be a problem for the country. where is this going to leave us and what do you think about? i get what you're saying and i talk about that in the book. we need to be our own jesus christ lets put it that way. we need to think that we matter. the american consumer is the most powerful consumer in the world. you can call your bank and say i'm going to take my money out unless you stop doing business with goldman sachs.

as consumers, we have enormous power. we choose where we put our money and how we hold our money and we spend it on. and that's my point. we don't need to wait for jesus christ to come save us. we need to save ourselves because it is each of us saving ourselves that we need to save the country. how do you make everybody aware? >> to the second question, and that is my concern in the sense that in the desperation that's out there that can lead to places like i said before, i

want to be that 83-year-old walks to the park. we need to be mindful of the fact we are powerful as consumers but the world is watching what we are doing and what we are not giving and they are free to make decisions with respect to what they do with their money and how they hold it and i think it's important that we make sure the u.s. dollar is a reflection of the country and that our banking system is the reflection of the country and that we need to start putting pressure so that it reflects the actual majority of people because the majority of people in this country they go to work everyday, they are hard-working people, they want their money in

the bank and they want this to work. i think the fact that they don't just doesn't change the fact that we as the people are way more powerful than them. >> one of the things in the book is that you just stop reading everything else. it's possible. i think to answer your question as a lawyer, which i am, there are two things that are damaging to the country. and obviously at some point we have to figure out how to fix it. it required the press to present both sides and to act in the public interest and not as a

private moneymaking entity. that has been harmful and i think we are seeing what that means to a. i think the other thing that has being harmful is the special interest and that is not surprising. >> has it become a special-interest? >> this is the thing, special-interest don't work if we don't let them and i'm not saying that we should change the law. but again i'm not the kind of person that wants to sit here and wait. we can put pressure, and we should because we should not lose hope, but we also have to be realistic. if we choose to exercise our power as consumers, we can modify these. the special interest in the world may promote goldman sachs but if we decide we are not going to let our money be touched by them, they are gone and it is that simple.

>> how is that good or not good and i think the banks are subject to credit examinations now and for what i understand they get a healthy bill of health so i would like you to comment on that. last, you could argue you had bear stearns and lehman brothers and allow a cleansing process where everybody went bust and that's the biggest penalty and then you would start fresh. to answer the question if i remember them if frank dodd we

need to strip the power away from the federal reserve. we are paying a lot of taxpayer money for that. second question, credit exams which is another way of asking has anything changed in the ensuing years. the fact that david solomon became the ceo of goldman sachs is all that by the end of the american people need to know. i have plenty of recordings to remind me if i had to forget.

why is it misrepresented when the books make it clear they would disagree as to how many livelies are in the book but ths at least one. i would say the fact that they have the power to stop that from happening and they didn't stop it from happening tells you everything that you need to know about the credibility of those exams if you will. and the third question asked >> your question is a good one should we make it a law of the land clicks yes. make them especially executives putting their money first. i think that will begin to change the behavior.

i know this is the last question. and i promise to somebody that i would comment on this so i will go back to the question. this morning he advocated for more supervision, and i could not agree more. it was nice to wake up this morning to that level of support for what i'm advocating. and interestingly enough to be the supervisor and have more supervision power and i think that's right. they need to be stripped. they have enough in the policy and as people we need to make this happen. ..

. >> [inaudible conversations] [applause] [applause] . >> thank you for that wo