So, It Turns Out the Banksters Weren't Really Being Regulated

How surprising, eh?

I shall be watching for renewed calls to do away with the Fed.

Our financial regulatory system is obviously dysfunctional. But because the subject is so tedious, and the details so complicated, the public doesn't pay it much attention.

That may very well change today, for today -- Friday, Sept. 26 --- the radio program "This American Life" will air a jaw-dropping story about Wall Street regulation, and the public will have no trouble at all understanding it.

The reporter, Jake Bernstein, has obtained 46 hours of tape recordings, made secretly by a Federal Reserve employee, of conversations within the Fed, and between the Fed and Goldman Sachs. The Ray Rice video for the financial sector has arrived.

[...]

After the 2008 financial crisis, the New York Fed, now the chief U.S. bank regulator, commissioned a study of itself. This study, which the Fed also intended to keep to itself, set out to understand why the Fed hadn't spotted the insane and destructive behavior inside the big banks, and stopped it before it got out of control.

[...]

[It turns out t]he Fed encourages its employees to keep their heads down, to obey their managers and to appease the banks. That is, bank regulators failed to do their jobs properly not because they lacked the tools but because they were discouraged from using them.

[...]

I don't want to spoil the revelations of "This American Life"  (transcript): It's far better to hear the actual sounds on the radio, as so 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. But once you have listened to it -- as when you were faced with the newly unignorable truth of what actually happened to that NFL running back's fiancee in that elevator -- consider the following:

1. You sort of knew that the regulators were more or less controlled by the banks. Now you know.

2. The only reason you know is that one woman, Carmen Segarra, has been brave enough to fight the system. She has paid a great price to inform us all of the obvious. She has lost her job, undermined her career, and will no doubt also endure a lifetime of lawsuits and slander.

  Bloomberg View

Just like every other situation where we have regulators. It’s just window dressing.

Go on over to the article and read it. And check out the NPR "This American Life" program (transcript).

“A quick Internet search reveals at least seven former Fed bank examiners who now work at Goldman. They include the colleague who, according to Carmen, asked her to change her meeti ng notes.”

This will no doubt make Ira Glass' career - the Glenn Greenwald of the banking affair.

And if you ask me, which you didn't, Barack Obama shares a good portion of responsibility for the bankster/financial meltdown/scandal (that has not to date been corrected) considering the number of Goldman Sachs people he included in his administration, not to mention the Bush appointment of Goldman Sachs' Hank Paulson to Secretary of the Treasury, and then Obama's replacement Tim Geithner, who had been president of the NY Federal Reserve while Paulson was at Treasury.