Bankers committed massive fraud leading to the financial crash of 2008, which then caused cataclysmic job loss, foreclosures and more than a $12 trillion drain on the economy. Where were the law enforcers? Bankers captured them, metaphorically.
More than 10,000 member of Public Citizen petitioned Congress to hold hearings on regulatory capture following the September release of tapes made by a regulator named Carmen Segarra. She resisted following the instructions of apparently captured regulators who were her supervisors, and was fired for it. On Nov. 21, a Senate banking subcommittee will open those hearings. New York Federal Reserve Bank President William Dudley will testify. Segarra worked as an examiner for his agency.
Here are a few questions
Q. According to Carmen Segarra, she was fired for trying to do her job. She was told to tone down her criticism of banks, but declined. How many examiners are terminated each year by the New York Fed? Former counsel to the Financial Crisis Inquiry Commission Bart Dzivi said Dianne Dobbeck, one of the most senior supervisors at the New York Fed, is “completely the wrong type” of person for the job. Is an examiner ever terminated for failing to detect a problem with a bank early enough? Does the New York Fed have a system to reward diligent examiners?
Q. The Segarra tapes cover an 8 month period three years after the crisis. If the crisis itself constituted a “teachable moment,” then must we assume that the problem of regulatory capture is only getting worse? More