Courtesy of Pam Martens.
William C. (Bill) Dudley, President of the Federal Reserve Bank of New York
In a feeble public relations move, Bill Dudley, the President of the Federal Reserve Bank of New York and FINRA, the self-regulatory body on Wall Street, are making noises about cleaning up the culture on Wall Street. It’s always dangerous to make any predictions when it comes to Wall Street but in this case we can confidently predict that when it comes to the New York Fed and FINRA, the only possible impact they could have on the culture is to make it worse.
The New York Fed didn’t see a problem for Bill Dudley’s spouse to collect $190,000 a year in deferred compensation from JPMorgan Chase while the New York Fed served as the bank’s main regulator. The New York Fed didn’t see a problem for Citigroup’s CEO, Sandy Weill, or JPMorgan CEO, Jamie Dimon, to sit on its Board of Directors as their banks embarked on a serial reign of abuses against the investing public. In 2013, Carmen Segarra, a lawyer and former Bank Examiner at the New York Fed, filed a lawsuit alleging that Relationship Managers at the New York Fed obstructed her investigation of Goldman Sachs and attempted to bully her into changing her negative findings. When Segarra refused, she was fired by the New York Fed according to the lawsuit. Segarra later produced internal tape recordings backing up the toothless regulation of Goldman by the New York Fed.
In 2012, Wall Street On Parade reported on how a Barclays’ bank employee revealed to a Senior Financial Economist at the New York Fed that his bank was not “posting um, an honest Libor.” (Libor is the benchmark interest rate used to set the rates for trillions of dollars of financial products around the globe.) That conversation provided an early window into one of the biggest cartel frauds in history. The conversation occurred in April 2008 and yet no one at the New York Fed saw any reason to alert the U.S. Justice Department that a key interest rate benchmark was being rigged.
The New York Fed epitomizes failing up. Timothy Geithner was the President of the New York Fed from November 17, 2003 right through the buildup of unprecedented leverage and toxic subprime assets on Wall Street. He continued in the position until 2009, despite failing to foresee the impending crash or the systemic corruption. As a reward for his negligence as a regulator, President Obama appointed him to become the U.S. Treasury Secretary in 2009, where he proceeded to oversee an unprecedented taxpayer bailout of Wall Street.
Exactly two months after Geithner took his seat as U.S. Treasury Secretary, he was called to testify before the U.S. House of Representatives’ Committee on Financial Services on March 26, 2009. During the hearing, Geithner was asked a question by Congressman Ron Paul. Geithner responded as follows:
…
