MICHAEL LEWIS: The 'Ray Rice Video' Of Wall Street Has Arrived

Michael LewisREUTERS/Lucas JacksonMichael Lewis.

A former Federal Reserve employee has provided an unprecedented look inside the New York Fed through a series of audio recordings made in 2012 that suggest regulators may have been too soft on Goldman Sachs in the wake of the 2008 financial crisis.

The secret recordings were made by Carmen Segarra, a bank examiner who was planted inside Goldman Sachs by the New York Fed to oversee the implementation of new regulations.

The tapes — provided to “This American Life” and to reporter Jake Bernstein of ProPublica — include 46 hours of conversations, largely between the Fed and Goldman Sachs.

The recordings “portray a New York Fed that is at times reluctant to push hard against Goldman [Sachs],” Bernstein writes.

Similarly, Lewis said: “Much of the meaning of the piece is in the tones of the voices — and, especially, in the breathtaking wussiness of the people at the Fed charged with regulating Goldman Sachs.”

Segarra, an experienced lawyer, was brought in by the New York Fed after a commisioned report from Colombia professor David Beim determined that problems within the regulatory institution were the result of a corrosive culture.

Bernstein offers an example:

One New York Fed employee, a supervisor, described his experience in terms of “regulatory capture,” the phrase commonly used to describe a situation where banks co-opt regulators. Beim included the remark in a footnote. “Within three weeks on the job, I saw the capture set in,” the manager stated.

Segarra witnessed those issues, too. But, as ProPublica reported last October, Segarra was fired by the Fed after pointing out problems within Goldman Sachs, as ProPublic reported last October. She later filed a wrongful termination lawsuit.

“This American Life” will air a special episode on the secret recordings on Friday, Sept. 26.

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