john quincy adams in his diary said matt long - - martin van buren looks like aaron and acts like aaron burr with these organized factions in political alliances together. >> i am privileged to introduce to politics and prose an attorney in private practice she attended harvard university columbia and cornell law school and working at citigroup and society

gender out. - - jenna rao she believe she should be monitoring the bigsh banks behavior to avoid another financial crisis. instead it was ineffective to hold banks accountable and began to secretly record her meetings which is the basis of the episode. it chronicles her experience with the relationship between the big banks and those government bodies set out to regulate them. and rights the gutsy whistleblower has the metaphorical explosiveve device inside the previously impenetrable the side of the powerful federal reserve bank of new york in a gripping and highly personal narrative - - narrative that regulatory

capture to exist between the new york fed and the wall street banks and the high pricee she paid for doing the right thing please join me to welcome carmen. [applause] i will rearrange this a little bit because this will not work for me. it is too high.e do you have a little stool that i can stand on?

[laughter] so that's like a workout. so let me take this opportunity it is a very busy day and there are a lot of important issues so i am very grateful you have made time to be here today. [laughter] perfect. >> which is better? this one? [laughter] now i feel really tall.

like paul volker now the world looks different from here. i don't like it. it throws me off and rather be down there. and i also want to leave plenty of time for questions before we start i do have a tendency to speak very fast if i am just yell at me and then i will slow down because again i did not ask to be in this position and i never thought i would be at all. so it is quite a surprise for me to be here in a sense.

thank you for the introduction so tenal years with the financial crisis so in the private sector and then to work at a bank which is really important to control that image of trust that in reality i am here to tell you so instead of ten dollars an hour it was a lot more than that so i think that was great preparation walking into the federal reserve to make it

clear there was a mass that needed cleaned so i was expecting to see the mess. but sure enough then there were meetings with goldman sachs executives and then they were double speaking their way through the meetings. and also within days with my colleagues at the federal reserve who had been there for a very longen time were trying to suppress evidence in a systematic way and expunge that from the record. this is serious and evidence rsat could be used by other regulators, my colleagues or by the federal reserve to hold those facts accountable which

is their job. i didn't have to try very hard i just had to sit to watch and ttake notes but of course, it was the issue that you can be effective to fix it so it became evident over a couple of months this is a mess and beyond my ability to fix or my colleagues that have joined as well from the outside. within a coupleou of months setting up a parallel team of regulators that were

side-by-side supervising like this system was replicated in each one. so at first we were sure that they were given the time and the space that they needed and i was sympathetic but it became very clear that we were not going anywhere and that snowballed into other things so that i thought they were leaving and then they were not y so taking notes watching your colleague to try to push back

in very basic ways this is an difficulties to understand the very basics that then you see these other ideas systematically from happening but then after the lead evidence that in and of itself like a career cleaning up messes that wasn't surprising. went to law school. i'm not glad that it happenedm n but you do have to know how to do this. and then to say no. we are not doing that.

but it came clear that it was coming from above and then i said i'm in way over my head and then i started to get legal advice. i am very lucky because i was a lawyer practicing for ten years i had a network of lawyers and friends and professionals that i respect and they started to ask for advice. what should i do? it isn't normal and first of all, without exception to you and ari need to start presenting the evidence and startt recording. but it was just a concern that

made me pause and think of what i should do and then the moment came i decided that it was time too present the evidence and to make a very compelling choice and then i felt if nothing else it will help me do my job better that i could find ways to work with people to turn things around and then from my perspective to turn thingshi around to occupy wall street with you

agree or disagree with occupy wall street, they had a point. it was clear that enough articles had made it out that the fed was asleep at the wheel. and they did not deliver. as the months progressed it was clear it would not happen and then i walked through that process in the book how it became very clear to suppress or expunge from the record and at that point i had to make a decision of what to do and from that personal standpoint the way i see it i went through all of these

educations not only because i could but because it meant a lot to me to send a signal to the market so i felt i will just get another job but it had started to show my story with my colleagues and allies and they were horrified. i cannot tell you how many people said you have to blow the whistle. this is important for the country not just you. we always believe that the fed is above this and be trusted them with supervision for a reason this shows the opposite because of course, it is

upsetting to my personal life. because this is happening at the same time. i'm getting engaged trying to plan a wedding? and then trying to do both at the same time and then i was whistleblowing and then went and got married and then back to whistleblowing and the allies in the group such a big group of people who were just incredibly helpful and supportive and the media that was kind enough to listen to my story so i worked with them

to bring that to light there was a congressional hearing and then nothing changed some after you read this book you should go back and look at the testimony that would be an eye-opening experience. i will leave it at that but as an advocate for less transparency to go ahead and promote it. but also my other colleagues who have come in just like me

they were not at the fed anymore and that's a problem. so i decided it was important to tell the whole story because i had request from every network and everyone that you can imagine they all wanted to talk to me but i very quickly wanted to show the depth and the scope of the systemic corruption so with that format and that lends to tell the story in detail to create a compelling case more than any words that i could say or a 50000-foot discourse

it didn't matter you just have to see it so in the book i tried to take you through that journey with my eyes to listen to these people and in the way that they say them and i hope it will begin an important conversation in terms of what will we do to fix this problem? obviously with an expert in this field however the first step we haved to take is to take it seriously if we have that much time left before the

financial crisis to fix this problem and it's better to fix this type of leaky roof when the sun is still shining because when the financial crisis comes it will be really tough. and this is a problem to impact us all it is not democratic or republican problem with worldwide consequences. the plans will not go far if we have to do a bailout after lebailout. so to enforce the american rule of law and then take the hard taxpayer dollars and to me that just is not acceptable and should be anybody who a uses the us dollar to pay for their

bills. and now i will open to questions and answers. [applause] don't be shy. >> take you for your presentation. someone wall street rights its own rules the most important sentence says for the investor class are untouched and the terms conservative advisor

says i don't know what happened to be some type of cynic the more they change the more they stay the same. so this audience doesn't have to worry but the average person will not make it. you don't have to worry. i don't have to worry but to i don't see any profound change. >> that is a wonderful question. i do think everybody in this room has to worry. i understand that the way i seen it i am older than i look but one day i will be 82 years old and i don't want to sit in my apartment upset with the world because those outside are starving and hungry with no hope for the future i want to be that lady that can walk

to the part one - - the park and said there because unless we take supervision seriously to make sure we restore confidence in the banking system. i agree with you we are tired we do know that it doesn't work and that as you pointed out in the article, special interest have led to wall street rewriting its own words but what i found particularly troublesome is not that the presence or absence of rules over loopholes but the lack of enforcement of the rules that

there are it is the enforcement issue. these are basic things we are talking about one of the things people have been asking what you think about potential solutions? it is the supervision powers we have other regulatory agencies the cfpb and regulators on those that are not to slap on the wrist and those to consolidate all the supervisory bodies to separate from monetary policy i don't think they have the time or frankly the talent i think it

should be left to the professionals to the agencies that our trained to do it and we need to be staff those agencies as well it is a personal story and i'm hoping we connect with people that doesn't mean it's a problem that one person cannot fix this it will us in our daily lives to stop rewarding bad behavior and rewarding good behavior. love children or grandchildren and we promote good behavior we don't promote bad behavior

that's why i think it'll take ten orke 15 years i don't face that confidence that current generation can learn new tricks. this is a going forward concern about what we can do in the daily life. >> i have local here my whole life so is there a big cultural mentality difference between new york and here also then burn accu was a big part of that are not necessarily quick. >> those are good questions and to be honest i know enough to know about the culture i can tell you it's a very big

difference because those in the private sector you want to your bank to win and to be trusted that means everybody in the bank is better off so the colleagues i spoke tour very shocked to see how it was for goldman with that systemic risk and comply with the american rule of law so i could tell you about the difference of cultures but the head of the federal reserve

with bembenek he that well. [laughter] . >> i confess i love your book i have not read it either. >> i thought you wrote it. >> can you be more concrete with the systemic corruption? because ias speak for myself i don't know the material enough to know what you are referring to. so what is the system with that to exist? i how is that possible quick. >> excellent.

i try to answer the first one so one of the drawbacks in such a well-documented book is how you talk about what's in the book you don't want to end up in a situation so i don't go into details for anecdotes but for example, to discuss the same issues goldman sachs is having with money laundering in fact, this person went on to be promoted but then to sweep this under the table to help to do something about stopping foreign regulators from making

goldman sachs comply with the money laundering rules. i won't go into the complex of money laundering but but you have to have the file you are supposed to get first name and last name and what they do and how much money they have this is basic. so you have a federal regulator said bring me the files. they don't want to turn them over and they do that a lot of stuff was not there. this is not complicated. you could put your money in the bank but that part of that was for money laundering so it

is very upsetting to watch a regulator tell you it's not a big deal they didn't get this basic data. these are the rules you have to gather the data this is what the industry talks about because it is so basic. that is one example. and it was for real. and then another colleague was interrupted and said yes they have the same in japan and switzerland that they were trying to get upset and deflated like we were rating on their parade. so that is one example and the book has a lot of those

examples. so the second question of incentives and motivation that is an excellent question because i did not understand why they did it. if you want to billion non- - - be a millionaire you will become a millionaire. the pay is comparable when there is not that much of a difference. i was making more as a auregulator and then i didn't so what makes somebody and then not sleep at night but what i

can tell you is this to give a flavor which why that would be but with a sense of fear and then to talk about goldman sachs but then there was a regulator that got fired from another regulatory agency because goldman sachs pushed for it. and they push them to do it so they can lose their jobs and

then to tell other people they have personal circumstances they have kids and grandchildren so there are other life circumstances they are afraid to lose their jobs or what that means for their life. there is no one answer. . >> thank you very much i know when you referred to paul volcker that i retired from his specialized agency of the united nations which thanks to paul volcker now has certain oversight mechanisms in place but didn't at the time. so i would be very interested to follow up on the question

that was just asked if you would say something about what mechanisms for oversight you had to deal with? you talked about before but what is in place already quick. >> that's a really good question. i would say when i arrived at the fed they were just supposedly beginning to revamp those mechanisms we have these offices but in practice if you are fired before you contribute to those mechanisms so from a technical standpoint i did trigger it i informed my supervisors this is happening

and then i was fired so i started that but could not trigger it completely because i couldn't get anyone on the phone with me before i could create that record but everything in the book is exactly what happened and how you manage with respect to that mechanism. it back and thet want it back. they didn't want to do anything about it. they could have taken it back. >> you referred briefly to what you call a partial solution bringing together other bodies such as the consumer financial

protection bureau which is very weak as it is right now. >> this is an enforcement issue. the mechanisms are there. some of the statutes that are currently in place and can be used to hold the federal reserve and the employee reserves and goldman sachs employees accountable have not run out. it's something that the trial lawyers could choose to enforce as well and what is the appetite for the enforcement? you have the american people waiting for something to be done, tired of watching haphazard slaps on the wrist.

one of the things i talk about in the book is what happens when the judge gets to find their case you still work with the lawyer in the federal reserve and they represent goldman sachs. this is what happens. she discovers with respect to her husband and 24 or 48 hours later, something like that dismisses the case. three quick comments and then a question.

somebody once said we get the government that we deserve. so i mostly get involved and vote with the right questions there was a time when people used to go to jail for white collar crime. it would've been to so many people's lives. >> that the statute of limitations. is there anybody out there running on this issue that you think could give us leadership to focus the attention and create popular support for the

meaningful change? i'm asking for presidential candidates. >> to be perfectly honest, one of the things that happens when you are writing a book if you disconnect from the rest of the world. you have to. because i have a job so i need to work for a living i need to finish the job and jump into legal projects that swallowed up the rest of my time so i'm not caught up in terms of that.

i can tell you this. as citizens we need to start educating ourselves. and i hope that this book will help people in terms of understanding. i wrote it on purpose to be very simple. you don't need a law degree or economics degree. the one missing factor in the conversation is the american people. i think that american consumers are the most powerful consumers in the world. we also need to be realistic and we can't sit around and wait. we just can't we are putting pressure to strict supervision of a group of pressure coupled goldman sachs accountable.

how to educate your family on how you protect your family in terms of. the problem that we face right now is it's become so polarized in the environment and it feels like there is no room for the issues that matter to everyone and this is an issue that should and does matter to everyone. regardless of what is going on in dc, people get this. people get that this is a problem. the solution people are going to start implementing once they lose hope in the government's ability to fix this are going to be potentially detrimental to the u.s. and detrimental to the

color. this is an issue that we all need to work together towards fixing. quick questions that are related and correct me if i'm wrong it would be helpful if you explain that quickly for us. avoiding the mall every other fed. so consequently, i am wondering

if after the financial mess some updated ethical imperatives or guidelines have been adopted because i heard, i don't know if it is true it is a revolving door. at least in the federal government as imperfect as they are but they are pretty good so what is the status? and number two, when we adopted the too big to fail concept, has that changed the perspective or the operational procedures inside of the bank?

those questions by themselves are pretty complicated. >> the federal reserve bank they are private banks. they are not public entities and that's why i'm saying we need to put pressure and strip the supervision of a. it makes it clear this exists until congress decides that it no longer does. the mechanisms are there to strip the supervision power away. it's easy and doable and i think we should do it. to phrase it differently i work in private banks all my life before joining the fed. of course they all had issues but the level of competency and the commitment to setting up the compliance programs that work

are the understanding that it's important for the customers and for the system to. that is just please don't leave this room thinking there is any shred of hope they don't get it and the book makes that very clear. whether it happens or not i will tell you this anecdote because i think it sort of service to kind of make the point. there was a story that was published in which he had a conflict with respect to a family member working at another bank that wasn't disclosed and i go back to my point a slap on

the wrist is an enforcement issue. these things are common sense. there are thousands of banks in the u.s. between there are a lot of complaints out there who are trained to do this. there is no reason to have a revolving door and if you are going to go down that path you can. i unfortunately see problems with that as well because if you don't have a culture in the rule of law and importance of upholding the rule of law to give credibility to the banking system then you win will end up where you are right now.

i think it is different than that. it's an enforcement problem and cultural problem. the status and rewarding bad behavior at the federal level not rewarding bad behavior. i think we need to begin to swing the pendulum. i don't think that more or less poodles are going to make a difference. >> i just have one more question and a comment i guess. i had read that the financial crisis in 2009 was triggered by all of these mortgages given to

people that couldn't possibly pay them off. of course tim geithner was the head of the new york fed and became the secretar secretary oe treasury after the crisis. during the crisis in other goldman sachand othergoldman sae secretary of the treasury. it's built into the system, but when we talk about regulating the banks of the people said we never saw it coming. and it seems to me any regulator would have seen that coming. so, i wondered if you could

comment on that. >> there are so many things i wish i could say. regulators were not looking. i think the short answer to the question whether they have the ability or the power to stop this from happening is yes, they do. they have an enormous amount of power. one of the things i talked about in my interview is that i was afraid that coming in three years after the financial crisis and let's put ourselves back there. when i joined and i did the interview i didn't think that i was landing at omaha beach on the first wave. i thought that part was done. i was coming in on the third wave is going to be safe to learn.

they quickly shut this down and it was the new people but the short answer is they have the power. they choose not to exercise it deliberately. it's just not acceptable and it shouldn't be to any american. >> to kind of change the landscape with so many of these policies on both parties and at all levels from goldman sachs and these other companies where does that leave us to back channel these efforts to change

the international currency it seems to be picking up speed and that seems to be a problem for this country. fair is thawhere is that going ? .. .

>> that is my point. we don't have to wait for jesus christ to come save us. but each one of us saving ourselves to save our country. it will not happen. >> i agree but how do be mindful of the needs of those to do that to your second question and that is my concern i have a real sense of the desperation that is out there. and that can lead to that that's not the point because like i said before we need to

be mindful of the fact of the country but the world is watching what we are doing. we are free to make decisions with respect what they do with their money and in a certain world and that banking system is a reflection of the country so that it reflects the actual majority of people. so they are hard-working people and they want this to work.

so if you don't it does not change the fact that we the people are way more powerful than them. >> speed nine i don't know but that is possible. so the question or from a lawyer which i am and there are two things that is damaging to the country we will have to figure out how to fix it in the sense there are laws we are overturning since the end of the eighties and that has to be very harmful.

and also special interest have been very harmful and that is an surprising. >> and then to sell without special interest quick. >> i agree but it doesn't work if we don't let them. i'm not saying we shouldn't change that but and then we can put plush on - - put pressure but then we also have to be realistic then to exercise that power of consumers with those special interest. although special interest in the world we will not let her money be touched by them and it's really that simple. . >> three questions can you

comment on dodd/frank? all big banks are subject to credit examinations now. and lastly you could argue with lehman brothers to allow a cleansing process and that is the biggest penalty. what do you think of that as a solution? . >> so to answer your questions so with dodd/frank or frank died because frank wrote that not dodd to give more powers to the fed and then to take

the power away from the federal reserve. that is what it shows you. and then the credit so has anything changed? look. is all i need to know. and if i happen to forget him. and one more from goldman.

and then they disagreed as to how many. so the fact that the fed has the power to stop that from happening tells you everything you need to know. . >> and lehman brothers and bear stearns? . >> that is of a request one - - a very good one. to make them the executive and i think that will begin to change and i think i know this is the last question but so to

go back to your question and then to advocate for more supposition and i could not agree more. and interestingly enough and to have those powers that is right. but that is enough of monetary policy and then we can make it happen. [applause] . >> i'm sorry we are out of time. we can do more questions during the signing. thank you very much.

we have your book behind the register please form a signing line and fold up your chair. thank you. [inaudible conversations] taking

part at the cato institute in washington d.c.. this is an hour. . >> good afternoon i am the