that being said, i'm glad we had that conversation because it is an interesting perspective. >> guest: the silent partner on this book is saying any country that wants to cut to zero it would be a great outcome. wouldn't it be ironic if donald trump led to two more free trade outlets i'm hoping that happens but i can't guarantee. >> host: thanks for the conversation.

two politics and prose 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 she took a job at the federal reserve bank of new york she believed she would be monitoring the bank's behavior to avoid another financial crisis but instead she encountered a federal reserve holding banks accountable and began secretly recording her meetings that became the basis of the this american life episode. she chronicles her experience exposing the relationship between the big banks and government bodies set up to

regulate them. william co. and author of moneyy and power held goldman tax came to rule the world rights in noncompliant whistleblower detonates a metaphorical explosive device inside of the previous impenetrable limestone façade of the federal reserve bank of new york. in a gripping and highly personal narrative, she reveals the depths of the shameful regularity that exists between the new york fed and wall street bank that is meant to supervise and the high-priced she paid for doing the right thing. please join me in welcoming carmen. [applause] >> i'm going to rearrange this a little bit because this isn't going to work for me. it's too high.

>> like this or like this. we also need this microphone. >> do you have a little store i could stand on? i have one at home i use it to climb everywhere because they te build begins today for really tall people so here i am with my school grabbing all of the plates to make dinner. it's like a little workout. let me take this opportunity to thank each and every one of you for being here today i know dc is a busy place with a lot of options and a lot of important events that demands your attention so i'm grateful that you've made the time to be here

today. [laughter] now we are going to try which one is better. [laughter] now i feel really tall. i'm not 6-foot to seven. the room looks different from her, totally. i don't like it. it throws me off. i would rather be down there. let me grab my notes. i did write some things that i feel a little more accountable speaking extemporaneously and i want to leave time for questions.

before we start i do have a tendency to speak very fast so if i go a little too fast, just go like this and i will slow down. it's normal because i get really nervous. again i didn't ask to be in this position and i never thought i would be in this position so it is a surprise for me to be here. and as per the lovely introduction, thank you so much indeed i joined the federal reserve of three years after the financial crisis. i spent most of my ears before that working outside of the federal reserve and the private sector. there's all these fancy titles they give you when you work at a bank which is important because you want to portray that image of stability and trust to the

people but in reality, i'm here to tell you i was a legal made so into the cleaning messes for $10 an hour my job was to clean for a lot more than that because i went to law school so i think that it was great preparation. i went in expecting to see the mess or you have executives very comfortably double speaking their way through meeting without any fear of

repercussions they were trying to suppress evidence in a systematic way and this is serious and it's 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 banking supervisors. i didn't have to try very hard i just sit ther had to sit there h and take notes. fixing the problem of course was the issue. how do you go about this and how likely is it you will be effective at fixing it and it became clear in a couple of months this was a mess that was beyond my ability to fix and

beyond that of my colleagues who joined as well from outside of the regulatory world and it would also be under the ability to fix i think within a couple of months i had already seen how they set up a parallel team of regulators that were side by side representing the banks. it was like a system replicated in each of the bank so at first we were assured these were jobs where people were given the space and the time to find jobs outside of the fed and i was sympathetic of course to the sentiment it's no fun to lose

your job, but it became very clear that these people were not going anywhere and that snowballed and other thing. so i thought they were leaving and now they are not. so you are watching notes watching your colleague try to stop or push back in very basic ways we are not talking about things up war or difficult things to understand we are talking about basic things you don't expect a basic lawyer to understand then you see these other iraqi leaders systematically stopping any kind of accountability from happening then the moment came and yes it happened more than once i was

asked to include evidence. someone that was asked to spend a career cleaning up messes isn't surprising. i went to law school. i'm not saying that it happens to you do get asked and of course i've done this before so it like no i am not doing that and i know how to say no because i've done this before but it became very clear and i go through in the book this was coming from above and at that point i thought i'd weigh in over my head and i'm very lucky again because i am a lawyer and i have been practicing for ten years. 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 the humor me.

first of all without exception they said you need to start preserving the evidence and start recording but i knew about the one-person rul 1% rule becaa lawyer but it was just a concern on this basis and the ramifications that sort of made me pause and think if this is something i should really do. the moment came it was time to preserve the evidence and they made a compelling case to me and i agreed with them and felt if

nothing else it will help me do my job better and i did it hoping every day that things would change much and that i would be able to find ways to work with people to sort of turn things around. there was still hope in terms of trying to turn things around. it's three years after the crisis and was around the world whether you agree or disagree with occupied wall street they very much have a point. things needed to change so as the months progressed it was clear that this wasn't going to happen i will walk you through how once again i was asked to

lead, suppress, expunged from the record evidence and it's at that point i was fired and at that point i had to make a decision what to do it send a sa signal i'm going to be a hard worker but what's kept me thinking and going back to this is if i started to share my story with my colleagues and my allies and friends they were horrified. i can't tell you how many people came up to me and said you need

to do this this is important for the country, not just for you. we as a society believe the fed is above this and we have entrusted them with supervision for a reason and of the story that you are tellinbut you are s compelling and shows the opposite so there was a long [cheering] of reflection. thinking in parallel because this was happening at the same time we got engaged and here i am thinking should i plan a wedding or whistle blow in the question becomes how do i do both at the same time which is what i ended up giving. i took a break and then worked

with wonderful attorneys who were helpful and of course i called i and the analyzing that group who were incredibly helpful and supportive. i worked with them to follow the case and bring the story to light. after you read the book you should go back and look at the testimony it will be an eye-opening experience after you've read the book to advocate

against less transparency and oversight they went ahead and ad promoted a number of regulators that were working with me involved in suppressing evidence what also happened is my colleagues who had come in just like me if they are not working at the fed anymore or the other regulatory agencies, that is a problem and if so i decided that it was important to tell the whole story and i have a lot of requests from every network you can name they all wanted to talk to me at work on stories

together to explain and show this corruption you need to format to tell the story and a detail that would create a compelling case. i could blame this in an intellectual sort of discourse or bring it down to the lowest level but to send matter if youu just need to see it so i try to take you on a journey through my eyes but does it feel like to sit there and listen as people and say the things they say in the way they say them and i hope it will begin a conversation

that we need to have in terms of what are we going to do to fix this problem and obviously as somebody that is an expert in the field i have plenty of ideas and i think however that the most important first step we need to take right now is to understand the mess and take it seriously i don't think we have that much time left before the next financial crisis to fix this problem and it's better to fix these types of leaky roofs when the sun is still shining because when the hurricane of the next financial crisis comes up is going to be tough and this is a problem that impacts us all it is not a democratic or republican problem, it is an american problem that has worldwide consequences. our pension plans are not going to go far if we have to keep

doing bailout after bailout because the people that we have entrusted in the rule of law are not doing their jobs and more importantly they are taking our perfectly good hard working taxpayer dollars into deliberately not doing their jobs. to me that is just not acceptable and it shouldn't be too anybody that uses the u.s. dollar to pay for the rebels or anybody that depends on the u.s. dollar to pay for their bills. i will leave it at that for now. [applause] don't be shy. i don't bite.

thanks for the presentation. i"the new york times," february 11 this year when wall street writes its own rules for the most important sentence in here it says the loophole of the investor class remains untouched and one of the conservative advisers says i don't know what happened. i am kind of a cynic the more things change the more they remain the same. this audience doesn'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. that is a very wonderful question.

i do think everybody in the room has to worry. the way that i see it, i'm older than i look. one day i'm going to be 82-years-old and i don't want to be in my apartment afraid to go outside because people are starving in hungary and have no hope for the future. i want to be that lady had walked her way to the park and sits there and watches the 11 and ten-year-olds. as we start taking the supervision seriously and until we start making sure that we restore america's confidence in the banking system we are tired and i agree with you we are tired of these catchable slaps on the wrist and the average

american knows special interests have led to wall street rewriting some of its own rules. having said that, but i got troubles some isn't the absence of the rules were the loophole but it's the lack of enforceme enforcement. these are basic things we are talking about. one of the things people have been asking me what do you think about potential solutions and one of the things i point to is the federal supervision powers we have other we have to look at

the actions that are not a slap on thslap onthe wrist and the oi would like to see that o put one table is consolidating these others into one body from the monetary policy i don't think they have the time, the appetite for the talent to do any supervision work and at th the k makes that very clear that he should bshould be left to the professionals and other agencies that actually are trained to do that and i do agree with you that we need to staff those agencies and focus on goldman and the fed because it is a personal story and i'm hoping it will connect with people but that doesn't mean it is an isolated problem.

this is a cultural problem, a systemic problem. you have children a lot of you have grandchildren. it's a cultural thing we start turning the clock that's why i say it's going to take ten or 15 years i don't have any faith or confidence that the current generation of people working there are going to be able to learn new tricks there's plenty we can do to begin to start turning back the clock. >> i'm a local here. what is the cultural difference

but maybe tolerates some of the behavior and also is ben bernanke a big part are not necessarily? >> i've been to dc before but i haven't been enough to know a very big difference in terms of people who work in the private sector and will try and counter at the regulatory sector because when you are working for a particular bank and you want them to win and to be trusted and have more customers so i think the colleagues i spoke to were very shocked to see how great it was for goldman and how

unfair it was for all the other banks and systemic risk without having to comply with the american rule of law what does that mean and what kind of a systemic risk does that create so i can call you about the file difference in those cultures. thank you very much. i confess i haven't read your book, can you be more concrete and give examples, can you give concrete examples because i think at least i speak for

myself i don't know the material of what you are referring to. that's one question, and the other part what is the system of incentives and motivation that allows what you call systemic corruption to exist and to perpetuate itself how is that possible? >> i try to answer the first 11 of the drawbacks having written such a well-documented book i tend to be very careful in how you sort of talk about what's in the book because you don't want to end up in a situation where you are saying something different to go into great detail about the anecdotes that i will just point to a couple of

things for example there was a meeting we were discussing the serious issues goldman sachs was having with respect to money laundering and in that meeting you see one of these regulators in fact this person went on to be promoted and bob slater recruited me to sweep this under the table and to help to do something about stopping the foreign regulators from making goldman sachs complied with money laundering rules. .. how much money they have, this is basic stuff. and so you have foreign regulator, can you give me the files. and so one day they want to turn

them over and then they have to turn them over and then there was stuff there wasn't there. this is not a complicated thing. there is no fax to that. but the angle of the exam was for money laundering. it is very upsetting to what your regulator tells you that it's not a big deal that they didn't get the basic data. this is not an opinion. this is the kind of stuff that nobody in the industry talks about because it is so basic. so that is an example. and it was for real. i was listening to this person,

with another colleague who is interrupting this person and saying, yeah they have the same binding in japan and switzerland, and trying to get upset and deflated. in the person sitting next to me was like raining on her parade. not letting her do her job. so that is an example. and there's a lot of those examples. you don't need to be a lawyer, you don't need to be an economist, it's in the calling. the second question in terms of sensitive nm motivators. that's an excellent question because i didn't really understand why they did it. i will put this way, if you want to be a mediator you have to become a lawyer, this is not -- i will put it this way. there was really not that much

of a difference and if it was measured by the hour i was making more as a regulator that i was in the financial industry sector because after work 15 hours a day seven days a week sometimes and as a regulator i didn't. off the bat. hour i was making more. what motivates somebody to deliberately not do their job. i don't know i'm not that kind of person, i would not be able to go home and sleep at night knowing and taking pride in deliberately getting paid for not doing my job. i think it's a matter of speculation. i can tell you is this, the book tries to give you a little bit of flavor of why that would be. one of the things that i remember most vividly is a sense of fear. people live in fear. nuc how they are feared of their

supervisors, and they are afraid of golden facts. and for good reason. and there is a regulator that got fired from another regulatory agency and that said push the regulatory agency to do it. in some of them are facing their jobs and there are people who have personal circumstances, they have kids to play, they have grandchildren to pay for, so for them their concern is where they are really afraid to lose her job. and what that would mean in their daily life. there is no one answer. next question. >> thank you very much, you said

in the very beginning your furred to paul boca and from the specialized agency of the united nations which thanks to paul volker has certain oversight mechanisms that work at the time for the food program. so i would be very interested to follow up on the question that was just asked, if you would say something about what kind of mechanisms for oversight and ethics functions et cetera that you had to deal with -- you just talked about whistleblowing, but that's a very broad general statement. what's in place already that doesn't work? >> that's a really good question. i would say this, when i arrived at the fed they were just

beginning, supposedly to revamp those mechanisms and say we hav. from a technical standpoint i am for my supervisors via e-mail, this is happening and we need to discuss. and then i was fired. so i triggered the mechanism but i wasn't able to trigger it completely. my supervisors basically turned around and fired me before i was able to create the record. and one of the things that i talk about is exactly what happens when you try and how you manage with that mechanism. so one of the positions of the

team was that we have all this evidence, do you want to back, do you want to do something about it. and they didn't want to back they didn't want to do anything with it. they could've taken it back and they chose not to take it back. >> a parallel question, you read furred to what do you think is a partial solution, bringing together other about bodies through protections financial bureau which is very weak right now. would you need stronger oversight mechanisms for whatever you put in place? >> i would say yes. this is enforcement issue. the mechanisms are there, the statute of limitations on some of the statues that are currently in place that can be used to hold the federal reserve's and the federal reserve employees and golden

facts and golden facts accountable, these imitations have not run out. these types of crimes are there. prosecutors can choose to enforce them, try lowers can privately enforce as well. what is the appetite for enforcement. the problem is it you have the american people waiting for something to be done, tired of watching haphazard slots on the wrist, i am wondering what do we do when our government is failing us on every branch. one of the things i talk about in the book is what happens when the judge gets assigned your case, you were for the the lawyer. with respect to her husband in 2448 hours later something like

that just misses the case. >> hi, three quick comments in question. i don't know where to begin. >> take your time. i know what it's like to be nervous. >> i'm not nervous i just have so many questions and comments. somebody once said we get the government that we deserve. that is just a comment so unless we get involved in vote with intention and asked the right questions. there was a time when people used to go to jail for white-collar, to the best of my knowledge not very many people went to jail during this time that really ruined so many people's lives.

>> nobody went to jail. >> the justice department even under the obama administration, voted for this. so they didn't take that on. so to me that is a political problem. so my question now is, is there anybody out there that is running on this issue that you think could give us leadership to at least focus attention and create some popular support for meaningful change. i am asking for presidential candidates. >> okay. that is a very tricky question to answer. to be perfectly honest one of the things that happens when you're writing a book you disconnect from the rest of the world. you have to. i wrote every word in that book it didn't just happen by magic because i'm not a writer in the lawyer. i really had to tap into skills that i hadn't used since

college. and i had to end up writing 600 pages. and to be honest that's not to give you the runaround to your question, i legitimately in terms of the book, and because i have a job and i need to work for a living, so i have to finish my job and then jump into legal projects for the rest of my time. so i'm not caught up in terms of that. i can tell you that i think that our citizens we need to start educating ourselves. and i hope this book will help people in terms of understanding. i wrote it on purpose to be very simple, you don't need an economics degree, the one reason factor in this conversation is the american people. i think that american consumers are the most powerful consumers in the world.

i'm not saying that politics options are not important, i think they are, but i think that we also need to be realistic we just can't sit around. we have to start doing things and i think that putting pressure, to hold common facts accountable. and i think looking realistic equally at how you educate your family and how you protect your family in terms of knowing how the system is working and not working and how do you hedge for that. i think that the problem that we face right now is polarized environment that it feels like there is no room for the issues that matter to everyone. and there is an issue that should and does matter to

everyone. and i think that regardless that what is going on in d.c. the outside of d.c. people, get this. the solutions that 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. in detrimental. i hope you're getting to that point where people will pick up the ball and realized that we need to put politics aside and it's an issue we all need to work together towards fixing. >> congratulations on the book and you denigrate public service. quick questions. a lot of people think that the

federal reserve bank on the new york is a public entity. >> is a private bank. >> it would be helpful if you explain that quickly for us, the morals. it is a private bank, private entity. so most people don't know that. the only federal reserve that they spoke of is in the mall, every other federal reserve think the 13, 12. i am wondering if after their financial mess some updated ethical imperatives or guidelines have been adopted because i heard, i don't know if it's true but it's a revolving door and a lot of people are intertwined and if you work at one bank and your wife works at the other bank and in the federal government we have sufficient safeguards. they're pretty good.

so i'm wondering into the federal reserve bank a private entity. and we adopted the epic to feel concept, has that changed the perspective with operational procedurals inside the bank? i think those two questions by themselves are pretty complicated so i'm going to dismiss a question. >> yes, the federal reserve is a service of bank of new york of the 12 banks are private banks. they are not public entities. and again, that is why but started by saying that we need to put pressure in strip away. the charter exists until con chris excites it no longer does.

it is to easily strip the powers away. it is easy, doable and i think we should do it. to face it differently, i work in private banks all my life. before joining the fed. everyone of those private banks, of course they had issues but the level of competency in the commitment to setting up their actual legal and compliance programs at work in the understanding that it is important for customers and for the system that they work, was trustee to all these banks. it was absent of the federal reserve. please don't leave this room thinking that there is any shred of hope that they get it they just don't. and i think the book makes it very clear. whether they had better not, the

antidote is the first to make the point. a few months dasha could've been maybe much as much of the year but i think it was less. there is a story that was published in which she had not disclosed he had a conflict. it was in respect to a family member at another bank that he had disclosed. and i go back to my point. a slap on the wrist, it's an enforcement issue. it's not a conflict of being ethics, it's common sense. and i'm not sure that -- i will tell you that there are thousands of banks in the u.s. which means there are a lot of compliance and legal officers out there that are trained to do this. there is no need to have a revolving door. if you're going to go down that

path you can make this creative power, what your regulator you're always a regulator and that's it. i think that i can unfortunately see problems throughout that as well. again if you don't have a culture, and an appreciation for the rule of law and the importance of what's holding that rule of law to give credibility to the banking system, then you're going to end up where you are now. so i think the problem is not more or less, i think it's deeper than that. it's an enforcement problem in a cultural problem. i think it is to be a commitment by people to say we need to stop working worrying about behavior and that will trickle into the community not rewarding that behavior. and in the states not rewarding that behavior and then employees at the federal level not rewarding that behavior, i don't

think that is going to make a difference. >> thank you. >> i just have one question. i had read that the financial crisis in 2009 was triggered by all these mortgages that were given to people that couldn't possibly pay them off. and then they were resold to the public at large and so on. does the new york fed have any regulatory power or over that kind of thing tim gaertner was over the new york fed, then the new york treasury, then the

goldman sachs was each secretary of the treasury. so it seems to me it's built into the system. but when you talk about regulating the banks when the fed people say we never saw coming. and it seems to me that any regulator would've seen that coming. >> there's so many things i could say. even in the industry could see that coming. regulators were not working. that is the bottom line and i don't see how they could say that they didn't see that coming. i think the short answer to your question as to whether they have the ability or the power to stop these things were happening, yes they do. they have an enormous amount of power. one of the things that i talked

about in my interview with the american life was that i was afraid that coming in three years after the financial crisik there. when i joined after the interview, i didn't think that i'd be writing the beach on the wave. i thought that part was done i thought it was coming in on the third wave going to the beach, it's gonna be safe to land, it's been three years but no, this was the first wave people and they quickly shut this way down. but the intent was opposite. it was the new people that got the fake supervision by us not them. but the short answer is they have the power, they choose not to exercise it deliberately. and that is just not acceptable. in addition it be acceptable to any americans.

>> it is going to take some political finger to change the landscape. but with so many of these in both of these parties on all levels thinking money from goldman sachs and other companies. where does that leave us. and i would also wonder if you can comment these back channel efforts to change the international currency. it seems to be taking u pickingp speed and that seems to be a real problem for this country. where is this going to lead us? >> yeah. >> what do you think about that. >> i think the problem is that, i get what you're saying about the jesus christ thing, i talk about that in the book. we need to be our own jesus christ. we need to think that we matter.

because we do. the american consumer is the most powerful consumer in the world. you can call your parents and sam going to take my money out of this bank, you could call your pension funds, as consumers we have enormous power. we choose where we put our money, which is how we hold our money and where we hold our money. and who we spend it on. yes we do. that is my point. we don't need to wait for jesus christ to come save us, we need to start saving herself. it is a collective action of

each one of us saving ourselves that were gonna save the country. we can't sit back and wait is not going to happen. >> i agree with you how you make everybody wary and mindful of the needs to do that. how many people -- >> to your second question, and that is my concern is in a sense that the desperation that is out there. i know this book is going to get a reaction by a lot of people saying see i knew i was right. that can lead to places that are not positive. i hope not that is not the point, that's not why wrote the book, but i want to be the 83-year-old that walks through the park, i don't want to be the 82-year-old that's afraid to go out of her apartment. but i think we just need to be mindful of the fact that as a country we are very powerful consumers but the world is watching what we are doing and what we are not doing. and they are free to make decisions with respect to what they do with their money too. and how they hold it. and i think in an uncertain

world i think it's important that we make sure that the u.s. dollars is a reflection of the country and that our banking system is a reflection of the country and that we need to start putting pressure so it reflects the majority of people. because the majority of people go to work every day, they are hard-working people, they want their money to be in the bank that's why they trust their bank, and they want this to work. i think the fact that special interest don't, doesn't change the fact that we as a people, are way more powerful than them. >> didn't president of palma say the $400,000 check was from goldman? >> i don't know. it is possible. i think a question is a lawyer at which i am, there are two

things that are really damaging to the country. and obviously at some point work and had to figure how to fix it. one is the press, and a sense that they were overturned at the end of the 80s but required the press to sign both sides. into sort of act in the public and not as a private moneymaking entity. i think that is been very harmful and i think we are seeing what that means today and i think the other thing that has been very helpful is special interest. again that is not pricing. >> has it immediately become a special interest? >> special interest doesn't work if it doesn't make them. i'm not saying we should change the laws, but i am not the kind of person that wants to sit here and wait. we can put pressure, and we should, because we should not

just hope. but we also have to be realistic. if we choose not to, and if we choose to exercise our power of consumers we can notify these of special interest. all the special interest in the world, but if we decide we are not gonna let our money be touched by them, they are gone. it's that simple. >> i have three questions. can you comment on dodd frank, is it good enough -- i think all the big banks are examined to credit examination now and from what i understand they all get healthy and it will help. lastly, you could argue that the bureau started with the lehman brothers, and you could allow a cleansing process.

and that's the biggest penalty. and then you would start fresh. what do you think of that is the solution? >> to answer the three questions, dodd frank, or frank dodd, because frank wrote it not dodd. there is no powers to the fed, that is why am saying strip the power away from the federal reserve. look what they've done with it. nothing. that is what my book shows you. they're choosing to not do their job and we are paying a lot of taxpayer money for them. second question -- has anything changed since in between years? the fact that david solomon became the ceo goldman sachs and

all the american people need to know. i know david very well. he is in the book and plenty of notes and recordings to remind me of david. if i happen to forget him he was one of the managers that, one more from goldman, why he was represented, they would disagree how many lies are in the book but they said there is a least one. so i would say the thought that the fed has 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 the credit exams if you will, and the third question. [inaudible]

>> i think your question is a good one, should we make. [inaudible] we should make them special executives, putting our money first before reporting any money. and i think that will begin to change behavior. i know this is the last question. also the specter question but paul fulcher advocated for more supervision. and i couldn't agree more. it was nice to wake up this morning to that level of support. and interestingly enough he is an advocate to be the supervisor. and you have the federal reserve have more supervision powers. i think that is right. i think they need to be

stripped. i think as people we need to make this happen. >> thank you. [applause] [inaudible] >> we are out of time. we can do more questions during the finding. thank you so much carmen cigar and please pull up your chairs. [inaudible]