New tape recordings provide an alarming glimpse of the New York Federal Reserve and the way it goes about regulating the biggest Wall Street banks. Bank supervisors sound intimidated and reluctant to take a stand on a problematic Goldman Sachs deal and an inadequate patchwork of conflict of interest policies. Instead of pursuing their inquiry or demanding changes in bank practices, they downplay their concerns and let the matter slide.
Join Senators Elizabeth Warren and Sherrod Brown in Calling for an Investigation.
The New York Fed is a key part of the Federal Reserve, acting as the on-the-ground supervisor of the major Wall Street banks. According to an internal New York Fed report, written in 2009 but revealed recently, bank supervisors in the pre-crisis years ”saw issues but did not respond,“ were not ”willing to stand up to banks and demand both information and action,“ and were excessively deferential to the banks they regulated.
Five years later, a whistleblower’s tape recordings reveal a disturbingly similar pattern of inappropriate deference to regulated banks. A still more recent official report adds fuel to the fire by criticizing the New York Fed for sloppy oversight of the JPMorgan Chase office responsible for the $6.2 billion “London Whale” disaster.
Tell Congress to Hold Hearings on the Goldman Sachs Tapes and the New York Fed supervision process.
The financial crisis could never have happened without the passivity of federal bank regulators. And no agency’s failure was more pivotal than that of the Fed, which had the authority to crack down on the abusive lending that drove the financial system and the economy over the cliff, but repeatedly failed to exercise it.
Senators Warren and Brown are right: there should be hearings on the Fed tapes and the problem of supervisors still being too soft on big banks. Please stand with us in joining their call.
Thank you for your attention and support.
Americans for Financial Reform