she recently gave a talk in washington. this is one hour. >> i'm pleased to introduce carmen segarra to politics and prose. an attorney in private practice and cofounder.

she attended harvard diversity, columbia and cornell law school and has worked at citigroup. when she took a job at the federal reserve bank of new york sheet believed to be monitoring the big bank behavior in order to avoid another financial crisis. instead, she encountered a federal reserve holding banks accountable and began secretly recording her meetings that became the basis of the life episode. between the big banks and the body regulating them. william covering the author of moneofmoney and powerhouse goldn sachs came to rule the world writes a noncompliant whistleblower carmen segarra detonates a metaphorical explosive device inside the previously limestone façade of the powerful reserve bank of new

york in a gripping and highly personal narrative, she reveals the depth of the regularity, regulatory capture that exists between the fed and wall street bank it is meant to supervise and the price she paid for doing the right thing. please join me in welcoming carmen segarra. [applause] i'm going to rearrange this a little bit because this isn't going to work for me. it's still high.

i have a school at home i used to climb everywhere because you know they both kitchens today for really tall people so there i am grabbing all the plates to prepare dinner. it's like a workout. i know this is a busy place with a lot of options and there are a lot of what issues and ou altair that demand your attention so i'm grateful that you've made time to be here today.

[laughter] now i feel really tall. the world looks different from here. totally. i don't like it. it throws me off. i would rather be down there. [laughter] i feel comfortable speaking a little bit more extemporaneously and i also want to leave plenty of time for questions. before we start i do have a tendency to speak very fast so if i'm getting a little bit too fast, just go like this and then i will slow down. it's normal because i get nervous for these types of things. again i didn't ask to be in this position and i never thought i

would indisposition at all so it's quite a surprise for me to be here in a sense. as for the lovely introduction, thank you so much. indeed i joined the federal reserve about two years after the financial crisis and i spent most of my career. there are all of these that when you work at a bank which is important because you want to portray the image of stability and security and trust to the people that use the bank, but in reality i am here to tell you instead of cleaning for $10 an hour, my job was to clean for a lot more than that per hour because i went to law school and did that.

was great preparation. there was a mes method needed te cleaned and expecting to see the mess. it's misrepresenting and doublespeadoublespeaking their h meetings without any fear of repercussions and also within days i was attending meetings with my colleagues at the federal reserve where i've been for a long time in a systematic way and expunge it from the record. this is serious an a serious ane that could be used by other regulators.

stopping the problem was easy. i didn't have to try very hard i just had to sit there and watch and take notes. the issue is how do you go about this and how rightfully is it. it became clear in a couple of months this was a mess beyond my ability to fix and also beyond the ability of my colleagues who have joined as well from outside of the regulatory world. within a couple of months i have seen who was in charge of

supervision. they were sort of side-by-side supervising the banks. it was replicated in each one of the banks and so first we were not sure that these were supervision jobs that these people were just being given the time and spac the space they ned to find other jobs outside of the fed and i was sympathetic it's no fun to lose your job but it became clear people were not going anywhere. and that sort of snowballed into other things. people even got promoted.

then you watch and you are sitting there watching your colleagues tried to stop or try to push back against goldman. it's not the plaintiff law to understand. we are talking very basic things that you don't need to be an economist or a lawyer to understand and they see these other regulators systematically stopping any kind of accountability from happening. then the moment came yes it happened more than once. that in and of itself for someone that has been to korea cleaning up messes is not surprising. i am not saying that it happens, but you do get asked. of course i've done this before.

and i know how to say no because i've done this before. but it became very clear i'm way over my head and then i started to get advice. i'm very lucky because i am a lawyer and i've been practicing for ten years and i'm very blessed to have a network of lawyers and friends and professionals that i respect and i don't know if they respect me, but at least they humor me once in a while. i started to ask them for advice. what should i do. this is not normal. and i think it was sort of first of all without exception recommending you need to start preserving the evidence and start recording.

but i knei knew about the one se because i am a lawyer but it was just a concern on their faces and the real ramifications of what i was telling them. the moment came in they go through in the book that it was time to preserve the evidence. they've made a very compelling case to me and i agreed with them and i thought if nothing else it will help me do my job better. there was still hope from my perspective to turn things

around. there was protesting around the world and whether you agree or disagree to occupy wall street they had a point. other articles have made it out. as the months progress it became clear however that this wasn't going to happen. it was at that point that i was fired. at that point i had to make a decision. what do you do. i think from a personal standpoint the way that i see

it, i've gone through all of these educations and i get all of these not only because i coulcould, but because it meanta lot to me. send a signal to the market i'm going to be a hard worker. i thought i will get another job. what kept me getting back to this was i started to share my story with my colleagues and my allies and my friend. they were absolutely horrified. we as a society believe what we've been led to believe that the fed is above this and we have entrusted them with supervision for a reason.

there's a lot of period of reflection. this was happening at the same time. my boyfriend and i got engaged and here i am planning a wedding or should i do whistleblowing. then the question at the same time. they were very helpful and of course i call them the allies in the group. they are such a big group of people who were incredibly helpful and supportive.

to understand its importance i work with them to file the case and bring the story to light. there's a congressional hearing and then of course nothing changed. after the congressional hearing after the vote should go back and look at the testimony. you have janet yellin continuing to advocate for this transparency and oversight over the federal reserve. to promote a member of the regulators that were working with me and involved in suppressing evidence.

my other colleagues who had come in and they are not working at the fed of the other agencies they were working. it was important to tell the whole story. i had a lot of requests from every network but you can name. it's to explain and show the depth and scope of the corruption that has just rotted away in spite of the federal reserve. you need to format to tell the story in detail that would

create a compelling case with the 50,000-foot level intellectual sort of discourse or i could boil it down to the lowest level i think you really need to just see it. what does it feel like to listen to these people say the things they say. what are we going to do to fix this problem. i think however that the first step we need to take right now is to 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. it's going to be tough and i ths is a problem that impacts us all this is an american problem that has worldwide consequences. the people were enforcing the rule of law and it's important we take these good working hard working taxpayer dollars and that is just not acceptable and

it shouldn't be t too anybody tt uses a u.s. dollars to pay or anybody that depends on the u.s. dollar to pay for their bills. i want to open up for questions and answers. [applause] don't be shy. i don't bite. [inaudible] this year when wall street writes its own rules.

they remain untouched and one of the conservative advisers say i don't know what happened i'm kind of a cynic. the more things change, the more they remain the same. the average person that gets on the bus every day they are not going to make it. you don't have to worry. i think everybody in this room has to worry. the way i see it, i'm older than i look, the way i see it one day i'm going to be 82-years-old because people outside our

starving and hungry and have no hope for the future. that isn't going to happen as we start taking the supervision seriously and until we start making sure that we restore by taking it seriously we restore the confidence in the system. i think we are tired and i agree with you we are tired of these casual slaps on the wrist. the average american knows that these casual slaps on the wrist don't work and as you pointed out in the article, special interests have met via writing some of its own rules. what i found particularly troublesome when i was working at the fed is not the absence of the rules or the loopholes that

it's the lack of enforcement of the rules but there are. this is an enforcement issue and these are the things we are talking about. >> that is a good question asking what you think of the potential solutions and one of the things i point to is that we need to strip the federal reserve of the powers. we have other regulatory agencies. we have the consumer financial protection bureau we need to look at tangible options that are not a slap on the wrist. it's from the monetary policy and i think the fed can continue

and i don't think they have the time got the appetite or the talent to do any kind of supervision work. the book makes that very clear and that should be left to professionals and other agencies that actually do it and are trained to do it and i do agree with you that we need to re- staff those agencies as well. the book focuses on this because it is a personal story and i'm hoping that it will connect with people but this doesn't mean that it is an isolated problem. one person can't fix this. it's going to take us starting in our daily lives to stop rewarding bad behavior and start rewarding good figure. it is a cultural theme we start

rewriting and promoting good behavior and we don't reward bad behavior. we start turning the clock that's why i say it is going to take ten or 15 years. i don't have any faith or confidence that the current generation of people who are working there are going to be able to learn new tricks. this is a going forward concern that there is plenty that we can do in our daily lives to pin to start turning back the clock on that. >> i just wonder if you think there is a cultural mentality difference between new york and here that maybe tolerates some of this behavior and do you think ben bernanke is a big part or not necessarily? >> i've been to dc before but not 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 encountered working at the regulatory sector more customers means more money which means everybody in the bank is better off. people from the industry colleagues i spoke to were shocked to see how it was and how unfair it was for all the other banks and the systemic risk without having to comply with the american rule of law and what kind of systemic risk does that create. so i can tell you about the difference in those cultures but i can't tell you about dc.

so he was the head of the federal reserve and also -- >> i confess i have not read your book. >> i haven't either. [laughter] >> can you be a little bit more concrete end of systemic corruption can you give concrete examples because i think at least i speak for myself i don't knoknow material enough to image or to know what you are referring to. that's one question. the other part, what is the system of incentive and motivation that allows this to existing to perpetuate itself

how is that possible? >> i will try to answer that very likely. having such a well-documented book is that i tend to be very careful in how we sort of talk about what's in the book because we don't want to end up in a situation where you are saying something different and is in their. i'm not going to go into great detail about anecdotes that i will poinbut iwill point to a cf things. for example there was a meeting that we are discussing these serious issues goldman sachs was having with respect to money laundering and in that meeting you see one of these in fact this person went on to be promoted a month later. accordingly to sweep this under the table and to help to do

something to stop the regulators from making goldman sachs complied with money laundering rules. we are talking about complicated concepts we are talking something simple like you are supposed to have your data on file if this person a place andd want to open an account, you're supposed to get their first name, last name, but they do, how much money they have, this is basic stuff. so you have a regulator can you give me the files. one day they have to turn them over and then there's a lot of stuff that isn't there. this is not a complicated thing that also raises other issues imagine putting your money in a bank that doesn't keep track of.

but the angle of the exam was for money laundering so it is very upsetting. this is not in. this is the kind of stuff that nobody talks about because it is so basic. so that is an example. looking at this and trying to get deflated so this person sitting next to me is like raining on her parade.

the book walks you through a lot of those examples. you don't need to be a lawyer or an economist. it's appalling. the second question in terms of incentives and motivators i didn't understand why they did it. you'll become a lawyer. this is not -- 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. it was in the financial industry sector because i had to work 15 hours a day seven days a week.

i don't know, i'm not that kind of person and i wouldn't be able to go home and asleep at night, knowing that taking pride in that deliberately getting paid for not doing my job. i think it is a matter of speculation. other traits do not directly ask that question that gets a little bit of the flavor of why that would be. you see how they are afraid of their supervisors and you realize they are afraid of goldman sachs. there was a regulator that got fired from another regulatory and that's because goldman sachs pushed for it.

some of them are afraid to lose their jobs and i like to tell other people there are people that have personal circumstanc circumstances. they find themselves afraid to do their jobs and what that is going to mean in their daily lives. there is no one answer. >> next question. >> use it in the beginning that you refer to paul volcker. but from the united nations which thanks to paul volcker has a certain mechanism in place that were not at the time of the food program.

you are aware of what he left. what kind of mechanisms for oversight and etc. you have to deal with when you talked about whistleblowing. that is a really good question. i would say this when i arrived, they were just beginning to supposedly beginning to revamp those mechanisms and say we have an officer and an ombudsman. so, from a technical standpoint and as a lawyer i can tell you i

informed my supervisors this is happening. we need to discuss. it's before i was able to create the records from before the fed. we filed the whistleblower lawsuit and how with respect to that mechanism one of the decisions the team made it clear going to call the fed and say we have all of these evidence do you want it back and they didn't 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]