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Goldman "Whistleblower" Sues NY Fed For Wrongful Termination

Tyler Durden's picture





 

After seven months of investigating Goldman Sachs' legal and compliance divisions, former NYFed examiner Carmen Segarra found numerous conflicts of interest and breach of client ethics (specifically related to three transactions - Solyndra, Capmark, and the El Paso / Kinder Morgan deal) that she believed warranted a downgrade of Goldman's regulatory rating. Her bosses were not happy, concerned that this action would hurt Goldman's ability to do business, and, she alleges, they urged her to change her position. She refused, and as Reuters reports, she was fired and escorted from the building. “I was just documenting what Goldman was doing,” she said. “If I was not able to push through something that obvious, the [NY Fed] certainly won’t be capable of supervising banks when even more serious issues arise.”

Via Reuters,

A former senior bank examiner at the Federal Reserve Bank of New York filed a wrongful termination lawsuit on Thursday, saying she was fired after refusing to alter a critical examination of Goldman Sachs Group Inc.

 

The former employee, Carmen Segarra, said that in her seven months of examining Goldman's legal and compliance divisions, she found the bank did not have policies to prevent conflicts of interest as required by regulation, a conclusion that might have caused a downgrade of the Wall Street bank's regulatory rating.

 

As a result of Segarra's findings, the New York Fed's Legal Compliance and Risk team voted to downgrade Goldman's annual rating pertaining to policies and procedures, according to the lawsuit filed in federal court in New York.

 

It is not clear whether the downgrade occurred, but according to the lawsuit, the threat of one startled Michael Silva, who oversees the New York Fed's relationship with Goldman, and Silva's deputy, Michael Koh. The two officials were concerned that a downgrade could cause clients to stop doing business with the Wall Street bank, the lawsuit said.

 

...

 

Segarra was assigned to Goldman's legal and compliance divisions from October 2011 until May 2012, and looked into three controversial transactions related to Solyndra, Capmark and the merger of El Paso and Kinder Morgan. At that point, Kim, Silva and Koh fired her and had her escorted from the building by security guards after weeks of disputes and pressure to change her examination findings, the lawsuit said.

Via The Washington Post,

Goldman had past problems with conflicts. A year earlier, the bank had received a drubbing from the Securities and Exchange Commission and a Senate subcommittee over conflicts related to a mortgage transaction the bank constructed called Abacus. The SEC imposed a $550 million fine on Goldman for the deal.

 

Segarra was instructed specifically to assess Goldman’s conflict-of-interest policies, including how they worked in a merger between two energy companies: El Paso Corp. and Kinder Morgan.

 

...

 

Goldman did provide documents showing how it had divided its El Paso and Kinder Morgan bankers into “red and blue teams.” These teams were told they could not communicate with each other — what the industry calls a “Chinese wall” to prevent improper information sharing.

 

Segarra said Goldman seating charts showed that in one case, opposing team members had adjacent offices. She also determined that three of the El Paso team members had previously worked for Kinder Morgan in key areas.

 

“They would have needed a Chinese wall in their head,” Segarra said.

 

On multiple occasions during Segarra’s examination, Goldman executives acknowledged that the bank did not have a firmwide conflict-of-interest policy, she said.

 

...

 

On March 21, 2012, Segarra presented her conclusion that Goldman lacked an acceptable policy on conflicts to her group of specialists from the other too-big-to-fail banks.

 

...

 

A summary sheet from the group’s meeting recommended downgrading Goldman from “satisfactory” to “fair” for policies and procedures, the equivalent of a “C” letter grade.

 

...

 

As the Goldman review moved up the Fed’s supervisory chain, however, Segarra said she began to get pushback.

 

...

 

“I was just documenting what Goldman was doing,” she said. “If I was not able to push through something that obvious, the Federal Reserve Bank of New York certainly won’t be capable of supervising banks when even more serious issues arise.”

Perhaps one indemnifying issue here is that whereas Goldman has indeed chronically and blatantly transgressed on numerous occasions when it comes to the abuse of its clients, and generally breaching its fiduciary duties, Segarra's description of the internal Chinese wall within the Goldman i-banking division sounds rather conventional and ordinary, and as for a conflict of interest policy - which banks actually really has one? To be sure, there are far greater misdeed for which Goldman can be held accountable, so in some ways the focal point of her complaint is not very strong.

Still, as everyone knows, both Bill Dudley and Stephen Friedman used to be at Goldman, and as we noted Dudley and Goldman chief economist Jan Hatzius periodically did and still meet to discuss "events" at the Pound and Pense.  

So while her allegations may be non-definitive, and her wrongfful termination suit is ultimately dropped, there is hope this opens up an inquiry into the close relationship between Goldman and the NY Fed. Alas, since the judicial branch is also under the control of the two abovementioned entities, we very much doubt it.

Full suit below:

 

 


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Thu, 10/10/2013 - 21:22 | Link to Comment Dear Infinity
Dear Infinity's picture

Do The Bernank ...... the Ben Bernank!! Do the Bernank.....

 

 

 

THE BEN BERNANK!

Sub-$1300 gold , baby it's time to buy

Sitting fly in my 22 karat ride

Janet Yellen dripping FRNs like

That Fat Tower in Dubai

www.CompareGoldPrices.com

Thu, 10/10/2013 - 21:28 | Link to Comment Anusocracy
Anusocracy's picture

Too bad she can't sue in a Russian court.

Thu, 10/10/2013 - 21:36 | Link to Comment SafelyGraze
SafelyGraze's picture

she is a shoe-in as fed chair now that sumners is out of the running

Thu, 10/10/2013 - 21:40 | Link to Comment SMG
SMG's picture

Thank you Carmen for risking everything to make the world a better place.  

Thu, 10/10/2013 - 21:45 | Link to Comment HardAssets
HardAssets's picture

Her intelligence, courage and integrity are a fine example. We need millions more like her.

Thu, 10/10/2013 - 22:00 | Link to Comment Anusocracy
Anusocracy's picture

Sibel Edmonds and Carmen Segarra times a million.

Thu, 10/10/2013 - 22:06 | Link to Comment economics9698
economics9698's picture

She must be the only one at the Fed that does not know Goldman owns the Fed, kinda funny when you think about it.

Thu, 10/10/2013 - 22:22 | Link to Comment NoDebt
NoDebt's picture

Oh, my God, she is so screwed.  What was she thinking??  Blow the whistle and the cavalry comes riding in?  

This could be the stupidest woman in the history of the Earth.

What you found is called LEVERAGE, honey.  You use it to your personal advantage, you don't piss it away blowing the whistle to people who report directly to your masters.  

 

Thu, 10/10/2013 - 22:34 | Link to Comment g'kar
g'kar's picture

Thank you Carmen for being hot and not another Yellen type.

Fri, 10/11/2013 - 01:30 | Link to Comment James_Cole
James_Cole's picture

“They would have needed a Chinese wall in their head,” Segarra said.

Lol

Fri, 10/11/2013 - 06:32 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

Damn, you can hardly walk without tripping over another GS whistleblower.

 

It's getting so bad Blankfein will have to answer the phones himself.

Thu, 10/10/2013 - 23:28 | Link to Comment DeadFred
DeadFred's picture

I had this discussion with my son just yesterday. His position was that such conflicts are unlikely to be resolved with extreme prejudice while I thought the opposite. This is an excellent test case. Does she die? Does her case get thrown out as without merit? Does she get a hush money settlement?

Fri, 10/11/2013 - 06:39 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

She's dead......Fred.

 

Of course.....she could always go to Russia and hang with Eric Snowden.

Fri, 10/11/2013 - 05:01 | Link to Comment Doña K
Doña K's picture

@ No debt:  <<<What you found is called LEVERAGE, honey. You use it to your personal advantage>>>

You need to read Nicomachean ethics to appreciate what's important in life dude

Fri, 10/11/2013 - 06:09 | Link to Comment NoDebt
NoDebt's picture

I don't use /sarc tags.  You get it or you don't.

Fri, 10/11/2013 - 07:35 | Link to Comment Doña K
Doña K's picture

Apparently not too many got it since you already have 24 down arrows. Do you think collectively ZHedgers are morons?

Fri, 10/11/2013 - 07:39 | Link to Comment NoDebt
NoDebt's picture

No, they just don't get my twisted sense of humor sometimes.  I don't pay attention to down arrows anway (a little trick I learned from the BLS).  This isn't the first time I've gotten hammered and probably won't be the last.

Fri, 10/11/2013 - 07:43 | Link to Comment mvsjcl
mvsjcl's picture

I got it. It just wasn't that witty.

Fri, 10/11/2013 - 08:18 | Link to Comment NoDebt
NoDebt's picture

I'll try harder next time.

Fri, 10/11/2013 - 10:20 | Link to Comment Bucket Boy
Bucket Boy's picture

You found all the mental midgets lurking this morning.

Thu, 10/10/2013 - 22:34 | Link to Comment TheFourthStooge-ing
TheFourthStooge-ing's picture

.

Sibel Edmonds and Carmen Segarra times a million.

You'll want to include Brooksley Born and Lan Pham in that group as well.

Fri, 10/11/2013 - 00:10 | Link to Comment fencejumper
fencejumper's picture

Thanks for Lan link, Stooge - missed it first time around - and definitely agree about BB....everyone who hasn't seen it must watch this about her travails and mix up w/ Greenspan, Rubin, Summers:

 

http://www.pbs.org/wgbh/pages/frontline/warning/view/

Fri, 10/11/2013 - 01:31 | Link to Comment James_Cole
James_Cole's picture

I'm in the minority here for thinking this way, but I think most people want to do the right thing. All you need is a few bad apples in key positions and it sours everything. 

Fri, 10/11/2013 - 07:48 | Link to Comment mvsjcl
mvsjcl's picture

A few bad apples? I think you're being a tad generous.

Fri, 10/11/2013 - 09:34 | Link to Comment RaceToTheBottom
RaceToTheBottom's picture

"a few bad apples".

I think the breed of apple tree is the problem.  Some things cannot be solved except by ruthless trimming or removal of the tree and replacement with another apple tree more suited to the space where you are planting.

Fri, 10/11/2013 - 10:09 | Link to Comment Henry Hub
Henry Hub's picture

"There are a thousand hacking at the branches of evil to one who is striking at the root."

Henry David Thoreau

Thu, 10/10/2013 - 22:01 | Link to Comment AlaricBalth
AlaricBalth's picture

The Muppet Master had received "a drubbing" from the Securities and Exchange Commission a year earlier. A drubbing? Ouch.

I am sure that Lloyd B. was shaking in his Prada's after that and immediately ordered all minions under his charge to change their evil ways.

Fri, 10/11/2013 - 01:30 | Link to Comment U4 eee aaa
U4 eee aaa's picture

More like a dribbling

Fri, 10/11/2013 - 06:51 | Link to Comment Urban Redneck
Urban Redneck's picture

I see no evidence of any intelligence on her part, courage and integrity, yes, but not intelligence. However, I see plenty of arrogance, incompetence and stupidity on the part of GS management. There are real Chinese walls that do exist in banking, not between IB or analysts and prop or client trading, but between the actual work that the bank does and any outside "observation" and critical evaluation. Banking regulators and auditors are generally not that bright to begin with and they operate from truly JUVENILE handbooks and frameworks. A banking regulator walking into a bank is supposed to be like a health inspector walking into a mob front restaurant, perhaps they are cited for a cockroaches and can't peddle pasta or Peking duck for a few days, but the [real] spice trade remains out of sight and out of mind... This a stupid amateur hour sloppiness, and if private sector lawyers can't inflict consequences on G/S or the Fed, then I wouldn't hold out any hope for corrective action that doesn't involve lampposts and rope (or a contemporary substitute).

Thu, 10/10/2013 - 22:11 | Link to Comment booboo
booboo's picture

She better not get in to a hot tub............without me.

Fri, 10/11/2013 - 07:20 | Link to Comment Nothing but the...
Nothing but the truth.'s picture

America needs a whole bunch more of these good women and men like Ed Snowden. Those that will put intergrity and morality above the get rich quick and corruptly, mentality. These  citizens are the bedrock of a healthy nation .

Thu, 10/10/2013 - 21:37 | Link to Comment williambanzai7
williambanzai7's picture

NO BUSINESS PRINCIPLES LIKE SQUID BUSINESS PRINCIPLES

Thu, 10/10/2013 - 21:57 | Link to Comment ghengis86
ghengis86's picture

What, no 14? Something about that beak perhaps?

Thu, 10/10/2013 - 22:07 | Link to Comment LetThemEatRand
LetThemEatRand's picture

14.  When all else fails, release the ink.

Fri, 10/11/2013 - 01:00 | Link to Comment JohnnyBriefcase
JohnnyBriefcase's picture

Fucking perfect! masterfully done! Bravo!

 

Fuck yeah! Cheers! Kudos!

 

Huzzah!

Thu, 10/10/2013 - 22:29 | Link to Comment I_Am_
I_Am_'s picture

14. we are doing god's work

Thu, 10/10/2013 - 22:50 | Link to Comment g'kar
g&#039;kar's picture

Thats a nine legged octopod. It's crooked.

Fri, 10/11/2013 - 08:46 | Link to Comment Translational Lift
Translational Lift's picture

Now..... if she just spent her days surfing porn sites like the other a-hole Fed employees she would be promoted to the next level......

Fri, 10/11/2013 - 11:08 | Link to Comment TeMpTeK
TeMpTeK's picture

Maybe Queen Latifa will hire her....

Thu, 10/10/2013 - 21:21 | Link to Comment varnelius
Thu, 10/10/2013 - 21:29 | Link to Comment smlbizman
smlbizman's picture

she is obviously not a democrat....

Fri, 10/11/2013 - 01:14 | Link to Comment merizobeach
merizobeach's picture

I'm sorry, gentlemen, but those of you who think she's hot need to visit Asia more often.

Thu, 10/10/2013 - 21:19 | Link to Comment U4 eee aaa
U4 eee aaa's picture

Cue the car 'accident' in 5....4.....3....

Fri, 10/11/2013 - 01:32 | Link to Comment tom a taxpayer
tom a taxpayer's picture

Breaking News - Goldman hired more ex-cons than MBAs. 

So far in 2013 ex-cons beat out MBAs for new jobs at Goldman. Like other Wall Street firms, Goldman has found it more efficient to hire ex-cons experienced in fraud and bank robbery.  

"MBAs often require 1 to 3 years of on-the-job training before they can overcome their conscience and lose the last shred of human decency.  That's a 1 to 3 year drag on performance that we do not suffer with ex-cons. And the ex-cons are happy to start for less pay", according to a top Goldman executive interviewed while recruiting at Leavenworth Federal Penitentiary.

 

Fri, 10/11/2013 - 02:34 | Link to Comment sessinpo
sessinpo's picture

Ex?

Thu, 10/10/2013 - 21:21 | Link to Comment LetThemEatRand
LetThemEatRand's picture

Sell your explode-on-impact Mercedes.  Now.

Thu, 10/10/2013 - 21:25 | Link to Comment Croesus
Croesus's picture

Goldman Sachs couldn't possibly be involved in any wrongdoing...it's just impossible...

</hot, steaming pile of sarc>

Thu, 10/10/2013 - 21:29 | Link to Comment LetThemEatRand
LetThemEatRand's picture

Every-man's whistleblower is Gold-man's terrorist.

Thu, 10/10/2013 - 21:38 | Link to Comment e_goldstein
e_goldstein's picture

Not to mention her hot tub.

Thu, 10/10/2013 - 21:20 | Link to Comment Charles Nelson ...
Charles Nelson Reilly's picture

I guess the Jewish lawyers at the big firms didn't want to turn on their own and represent her?

Thu, 10/10/2013 - 21:29 | Link to Comment dick cheneys ghost
dick cheneys ghost's picture

Archie Bunker: ''I need a good jew lawyer"

~~~~~

http://www.youtube.com/watch?v=ur2W-uTfPq8

Thu, 10/10/2013 - 23:50 | Link to Comment RideTheWalrus
Thu, 10/10/2013 - 21:22 | Link to Comment RafterManFMJ
RafterManFMJ's picture

Precrime report indicates she will commit suicide in 5 days by shooting herself twice in the back of the head...

Thu, 10/10/2013 - 21:21 | Link to Comment RiverRoad
RiverRoad's picture

You Go girl.  Hang tough.

Fri, 10/11/2013 - 01:34 | Link to Comment U4 eee aaa
U4 eee aaa's picture

Hang tough is right. Welcome to the poor side of the street.

I hope you had a lot of money saved and are a very good trader.

Thu, 10/10/2013 - 21:23 | Link to Comment LetThemEatRand
LetThemEatRand's picture

"Goldman did provide documents showing how it had divided its El Paso and Kinder Morgan bankers into 'red and blue teams.'"

How incredibly appropriate.

Thu, 10/10/2013 - 23:54 | Link to Comment Big Brother
Big Brother's picture

"Goldman did provide documents showing how it had divided conservatives and liberals into red and blue states." - Was that what you were alluding too?  (That's what I saw when I read it)

Thu, 10/10/2013 - 21:30 | Link to Comment q99x2
q99x2's picture

She's lucky she only got fired. They have Obama's balls in a vise. (I was going to say Holder but  he probably was born testiculess)

Thu, 10/10/2013 - 21:25 | Link to Comment earleflorida
earleflorida's picture

beauty slays the beast with maternal instincts... "hell hath no fury like a woman scorned"

amen

Thu, 10/10/2013 - 21:26 | Link to Comment JustObserving
JustObserving's picture

If you did not know that US policies are targeted to aid Goldman, here is an anecdote that may change your mind:

Joseph Stiglitz couldn't believe his ears.  Here they were in the White House, with President Bill Clinton asking the chiefs of the US Treasury for guidance on the life and death of America's economy, when the Deputy Secretary of the Treasury Larry Summers turns to his boss, Secretary Robert Rubin, and says, "What would Goldman think of that?"

Huh?

Then, at another meeting, Summers said it again:  What would Goldman think?

A shocked Stiglitz, then Chairman of the President's Council of Economic Advisors, told me he'd turned to Summers, and asked if Summers thought it appropriate to decide US economic policy based on "what Goldman thought."  As opposed to say, the facts, or say, the needs of the American public, you know, all that stuff that we heard in Cabinet meetings on The West Wing.

Summers looked at Stiglitz like Stiglitz was some kind of naive fool who'd read too many civics books.

http://www.gregpalast.com/larry-summers-goldman-sacked/

 

 

Fri, 10/11/2013 - 01:03 | Link to Comment JohnnyBriefcase
JohnnyBriefcase's picture

Nothing would give me greater joy than to shoot larry summers in the nuts.

Fri, 10/11/2013 - 06:15 | Link to Comment Ned Zeppelin
Ned Zeppelin's picture

Regulatory capture. And hopelessly imbedded. The level of corruption is astonishing. But not surprising.

Thu, 10/10/2013 - 21:27 | Link to Comment MrBoompi
MrBoompi's picture

I guess they can fire as many people as they have to, but by now almost everyone knows GS rips off clients on a routine basis. Yet they seem to attract a lot of suckers anyway.

Thu, 10/10/2013 - 21:43 | Link to Comment Escapeclaws
Escapeclaws's picture

OT

Boompi, thanks for the tip on reading Fekete in a previous post.

Here is the url: http://www.professorfekete.com/articles/AEFPositionPaper1.pdf

The paper contradicts James Turk on hyperinflation and makes a case for hyperdeflaton.

Thu, 10/10/2013 - 22:34 | Link to Comment CPL
CPL's picture

Deflation is a myth.

It's impossible unless on paper they remove the money supply with negative interest rates.  The amount of money out there is still there, and always accruing interest.  It cannot in anyway 'deflate' ever under the current conditions.  Mathematically impossible.

What is being confused is the value of all the high end stuff and your own market value.  The money supply however is always steadily marching uphill.  The printing that's been going on is based on a tiny fraction of interest, a micro sliver of interest.  And guess what?  They can't pay that.  They have to print more.  Which is MORE owed.  Interest accrues again, just slightly higher and higher each time they touch the lever.  Inch by inch, just like it's built to do.

Even if they didn't touch the lever now, the interest would eventually overwhelm them.  That's how that math works out.  Deflation is a myth.  Complete myth.  It is impossible to have in a money supply that is seemingly infinite.  Like all fiat, it just goes away and never comes back.  The deflation people will see is in large ticket items.  Porches, Million dollar homes, Office real estate, all of it.

Yet the money supply stays constantly rising every second.  Keep it firmly in mind a default doesn't stop the clock.  Greece, Ireland, Spain, Portugal...they are off to the printers again as well.  This accelerates that process because of Libor rules changed five years ago.  Wild guess how well that works out.

Thu, 10/10/2013 - 22:42 | Link to Comment Buckaroo Banzai
Buckaroo Banzai's picture

Deflation first...then inflation.

Don't confuse the inevitable future with the inexorable present.

Thu, 10/10/2013 - 23:46 | Link to Comment CPL
CPL's picture

There haven't been any indications money supply is shrinking, only goods and pricing manipulation by subsidization are deflated.  Bread and circuses.  The money supply never shrank in anyway, nor did the cost of things, people paid for these things with their taxes. 

The term deflation could never possibility exist in this economic framework.  Compound interest doesn't allow for it under any of today's conditions.  The interest alone is self sustaining to generate an economy equal to the entire world per year at sub 1%.  That's the situation.  There is no larger business on the planet right now than interest on loans.  Once 100% GDP is met no one ever goes under that line again because it's mathematically impossible.

Can't pay more than a country makes on the interest, the principal, that entire loan value is still out there without a scratch in it.  Meanwhile every month another 55-85 billion gets slushed in which enters the fractional reserve banking system and magically turned into 9 times the amount given.  Which is then counted in the entire money supply.  USD is fungible, doesn't matter if it's in a mattress or in an account, it is accounted for and always present.  Doesn't magically disappear, it multiplies like rabbits as soon as the money enters a bank.  And these guys are allowed to loan internationally.  Round and round in a big circle.

Subsidies have kept a tight lid on how optics are presented.  At anytime the rubber band could snap and yes, a loaf of bread can instantly be repriced to 200 a loaf because that's the subsidies being removed.  Peru is an excellent example of how that shell game worked.

We will never see deflation or have seen deflation.  Only price action on market items when subsidization become faulty because the currency is worthless.  That doesn't stop the clock or lower money supply.  Interest keeps generating it. 

Deflation is a myth, this ride only goes one direction.  Up.

Fri, 10/11/2013 - 00:44 | Link to Comment Non Passaran
Non Passaran's picture

Inflation is a monetary phenomenon.  Prices for stuff with elastic demand may be down and money velocity is down, but all goods and services are already worth less because there's more money to that can buy them.  You can see inflation in land prices and downsized food containers (I also spotted it on fucking Ricola mints last weekend). 

Inflation (stagflation) is already here, it's just not evenly distributed. :-)

I'm hoping we'll hit the next stage ASAP. Let's go!

 

Fri, 10/11/2013 - 02:09 | Link to Comment CPL
CPL's picture

Inflation is a direct result of money supply, it has nothing to do with monetary phenomenon.  The price flux in real goods is directly related to that industry's subsidization through taxes, grants, loans, bursuries, etc.  Everyone here is responsible for their own pricing of goods in addition to government direction of those industries.

It's all an illusion, all of it.  At anytime the price controls can be released by ceasing subsidization of any number of industries as all supply chains are sourced as a single operating system. 

Inflation is the only direction this economy can do, it is not built to anything else.  In a ponzi scheme someone eventually runs out of people to fleece. In this ponzi system, since the guy running it has a printer, they can print on behalf of people 4500 years from now.  That's the system as it stands.  No more, no less. 

THere never has been a deflationary period ever.  Just because the bank has some idea that goods dropped in value, the pool of money in the entire system contravenes any indication of deflation.  The contrary is true.  Inflation is driven by the sheer availability of credit in a system, not because men in suits say so.  The numbers show otherwise.  in the entire Federal reserve's history all they've been doing is telling you what you needed to hear so you would jump through a hoop at the correct time.

It's working flawlessly.  There is no deflation, only inflation and people are so spin dizzy on the working mechanics of how money behaves as a math problem...here we are.  People believe that deflation can happen, when it never has and could never happen.  And never will happen.

 

That's why those clowns are freaking out...they've figured it out.

Fri, 10/11/2013 - 10:57 | Link to Comment BidnessMan
BidnessMan's picture

Biflation.  Inflation in the things you need - food - and deflation in the things you have -- if -- if deflation is allowed.  

If the shadow inventory of "pre-foreclosures" were all actually foreclosed, the serious deflation in real estate prices would have continued.  But has not been allowed to happen.    

The Feds need big-time inflation -- a slow motion Debt Jubilee.  

Thu, 10/10/2013 - 22:59 | Link to Comment robertocarlos
robertocarlos's picture

Loans go unpaid = deflation.

Thu, 10/10/2013 - 23:23 | Link to Comment CPL
CPL's picture

It's still on the books though, unless written off.  That didn't happen to the entire housing market in the US, or soon China.  Gov't bought them and let people stay in them for free.  There are no mark to market rulings anymore in any sector.

Deflation will never happen.  It is a guarentee of Inflation is the only direction this is headed by the removal of all the safety nets.  Only brake pad left is negative interest rates.

Fri, 10/11/2013 - 00:37 | Link to Comment Non Passaran
Non Passaran's picture

I wouldn't mind to experience a bit of sovereign loans-lead deflation, especially in FUKPIIGS circles... ;-)

And then see those cocksuckers Draghi and Lagarde write off their "investments" in those fucked up countries.

Fri, 10/11/2013 - 07:17 | Link to Comment Urban Redneck
Urban Redneck's picture

And the definition of "is" is???

When dealing with the money supply one must distinguish between the money supply in existence (total) and the "available" money supply, which taken in the aggregate and coupled with aggregate demand determines the general price level (before the CBO fucks with it to achieve political ends).

When the financial mafia goes to the mattresses, they will take a huge chunk of the money supply them, reducing the available money supply for everyone else, and thus generally observed prices.

The 64 trillion dollar question being IF or WHEN the FED prints FBO Joe Six-pack or Joe Biden instead of FBO Jamie Dimon... since that would be a prerequisite of significant inflation.

(unless of course you use a definition of inflation which excludes price level and focuses on money supply - which is certainly valid but a lot less fun in an already dismal pseudo-science)

Fri, 10/11/2013 - 10:06 | Link to Comment CPL
CPL's picture

The money supply being printed right now is only servicing a single item.  Interest.  That's the economy. That's all the economy is right now and all it's been since 2007. 

It's not iPads, tanks, bomb, bullets, hookers or blow.  Everything else in the economy is so nominal and tiny and worthless in comparison to a fraction of an interest rate.

When the interest is paid, that's money created in the aggregate.  The interest doesn't go away, it's still out there as capital because ALL FIAT IS FUNGIBLE.  A dollar can be physical or it can be virtual, but it will never be removed.  It is in no one's interests to remove cash from the money supply when charging interest is so very, very profitable.

So, no.  No one here has a single reference pointing to an occassion where the money supply has shrunk.  Even capital controls don't remove money, they are merely being used to pay ONLY interest on the principal debt.

Deflation is a myth.  Keep that in mind.  Add up the facts.

  • We have a monthly crisis now on budgets everywhere in every country on this planet.  Go check it out.  Since everyone is connected to the NYC Fed, they've all synced up in their timing of printing and payments.
  • The media swoons and everyone in ZH gets ready to BTFD.
  • Stock market rockets, price action gets messed with in PM's which aren't getting delivered btw.

All indications is inflation is still very present, price on anything today does not guarentee delivery.  That's what happens with inflation.  Everyone has a lot of money, but nothing they can afford.

Again I'll point to the failed Sol, New Sol, New new Sol tap dance that happened in Peru during the 80's and 90's.  The money never disappeared, nor did the debt.  So currency re-evaluation will never counter it.  Take as many zero's away from a dollar bill as people want.

It doesn't make it go away.  Just gives a bit more wiggle room to add back those zero's while the currency buys less and less.  Don't pretend that someone is going to 'delete' their money, they are as likely to 'delete' their 'money' as much as you or I would.

Fri, 10/11/2013 - 12:34 | Link to Comment Urban Redneck
Urban Redneck's picture

The money doesn't have to disappear, a big(ger) chunk of it simply must achieve a velocity of 0 to create deflation.

The simplified version of the Chicago school math is the most widely used but more importantly the most ascii-friendly so I'll go with mv=pq - each incremental unit of q for which v = 0, decreases the aggregate money supply and price level.

The FED lunatics and their ass-lickers who say there isn't inflation now (and are not using a very specific inflation definition) generally err when they presume that the increase the money supply must flow through as wages to cause prices to rise, when as long as the increasing STOCK of money FLOWS as disposable income that is actually disposed of- it creates demand for goods and services.

What happened in Q4'08-Q1'09, either in terms of observed prices (energy, housing, S&P500) or GDP and aggregate economic activity? The mad money printer of Marriner Eccles saw his favorite boogeyman and stepped up the CTRL-P, just like he said he would.

Thu, 10/10/2013 - 21:29 | Link to Comment Yancey Ward
Yancey Ward's picture

She will make a pretty corpse, if they ever find her body.

Thu, 10/10/2013 - 21:34 | Link to Comment ToNYC
ToNYC's picture

Whistleblowers make great skeet.

Thu, 10/10/2013 - 21:33 | Link to Comment Paracelsus
Paracelsus's picture

I recall how they used to castigate Meredith Whitney for her muni bond downgrade call.She was two years early but still on the money.This once proud nation where whistleblowers were put on a pedestal and worshipped....Oh well,look how we treat our veterans,can't even get a decent burial after getting killed in combat,never mind the ones who are wounded.

Odd how quiet the MSM are about Syria these days.Must've fallen off the map."Here be dragons!".

Thu, 10/10/2013 - 21:36 | Link to Comment Zer0head
Zer0head's picture

she actually never attached a timeline (the msm assholes did that_

and they prevailed as she just closed up shop

the only honest and decent analyst out there burned at the stake

 

Remember that next time you tune in to the assclowns Kernin and Becky

or the assclowns Keene and Fluffy

Thu, 10/10/2013 - 22:21 | Link to Comment Teddy Tenpole
Teddy Tenpole's picture

 

http://youtu.be/OQSNhk5ICTI

or when you watch the, "I am Zer0head" video.

 

 

Fri, 10/11/2013 - 07:47 | Link to Comment Wen_Dat
Wen_Dat's picture

Intense, thanks for that...fuckin double rainbow bitchez

Thu, 10/10/2013 - 23:37 | Link to Comment Spanky
Spanky's picture

+/-

For...

This once proud nation where whistleblowers were put on a pedestal and worshipped... -- Paracelsus

Really? To which golden glow "old days" do you refer?

Thu, 10/10/2013 - 21:35 | Link to Comment Zer0head
Zer0head's picture

PS

futures just about flat

WTF

Orange Sky tonight, Barry's Delight

Thu, 10/10/2013 - 21:50 | Link to Comment ChaosEquilibrium
ChaosEquilibrium's picture

The FED is NOT going to waste a 36 handle on the S&P.....to let reality, truth, incompetence, and fraud take 1/2 of it AWAY:

 

HELL NO...the S&P it too LOW

 

We are going to pump this FUCKER  until it looks too good to be a BUBBLE!!

 

This is the NEW NORMAL.....a REEVALUATION OF ALL ECONOMIC PRINCIPLES AND LAWS OF RATIONAL HUMAN NATURE!!!

 

Let it RIDE Baby....WE ARE ALL IN!!!!

Thu, 10/10/2013 - 21:35 | Link to Comment Paracelsus
Paracelsus's picture

It will be settled out of court.No trial.No subpoenas.No peeking behind the curtain!

Thu, 10/10/2013 - 21:38 | Link to Comment The Gooch
The Gooch's picture

Godspeed.

Thu, 10/10/2013 - 21:40 | Link to Comment mark mchugh
mark mchugh's picture

Anybody remember who was Barack Obama's second biggest campaign contributor?

http://www.opensecrets.org/pres08/contrib.php?cycle=2008&cid=N00009638

Thu, 10/10/2013 - 21:43 | Link to Comment AgLand
AgLand's picture

Here's wishing her at least $20 million.

Then again, they just print the shit up in the basement anyway...

Thu, 10/10/2013 - 21:42 | Link to Comment insanelysane
insanelysane's picture

WHAT???  SOMEONE'S DOING THEIR JOB!  WE CAN'T HAVE THAT GOING ON HERE!!!

-NY Fed

Thu, 10/10/2013 - 21:42 | Link to Comment therevolutionwas
therevolutionwas's picture

In a world where the nuts were not running the nut house, this event would cause a swift and total house cleaning revolution.  But in today's world we are  daily bombarded with reports of, what should be, outlandish criminality committed by those in power and there is NO OUTRAGE.  Where is the outrage?  I hope there is more than five or six of us.  Otherwise we havn't much of a chance of turning this around.

Thu, 10/10/2013 - 21:43 | Link to Comment SoNH80
SoNH80's picture

Been there, done that, took at a 70% pay cut.

Glad I did.

 

Thu, 10/10/2013 - 21:57 | Link to Comment socalbeach
socalbeach's picture

Stengle Law


Stengle Law Announces Wrongful Termination Filing Against FRBNY

... Among other types of misconduct, the Complaint alleges FRBNY employees cornered Bank Examiner Segarra in an office and tried to force her to change her bank examination findings. Segarra refused and was fired three business days later...

“The law expects bank examiners will be allowed to examine big banks without fear of reprisal,” said Stengle, attorney for Carmen Segarra.

Plaintiff Carmen M. Segarra, Esq. attended Harvard, Columbia, and Cornell University law school and is an attorney who works in banking. The wrongful termination complaint was filed in the United States District Court for the Southern District of New York.

...

Stengle Law is a small law firm devoted to providing strong advocacy for whistleblowers reporting misconduct and financial fraud against the government.

Attorney Linda J. Stengle represents Ms. Segarra and can be reached for comment and information by calling 610-367-1604.

Thu, 10/10/2013 - 21:51 | Link to Comment Teddy Tenpole
Teddy Tenpole's picture

 

 

Nobody likes a rat.

Thu, 10/10/2013 - 21:57 | Link to Comment SoNH80
SoNH80's picture

Hello? Hello? Is this thing on?

Thu, 10/10/2013 - 22:41 | Link to Comment WTFUD
WTFUD's picture

Yeah, we don't like you, so fuck off.

Thu, 10/10/2013 - 21:53 | Link to Comment TaperProof
TaperProof's picture

Apparently she lives in a fantasy world where bankers aren't gods

Thu, 10/10/2013 - 22:04 | Link to Comment Freedumb
Freedumb's picture

Her name was Carmen Segarra. Remember Carmen, no more flying through Heathrow or Sheremetyevo.

Thu, 10/10/2013 - 22:09 | Link to Comment Downtoolong
Downtoolong's picture

    

Damn it Carmen, we’ve been over this fifty times. Nobody is guilty; nobody admits any wrongdoing. The whole point of these investigations is to come up with the right answer that exonerates our masters. If we do a really good job of that they might agree to pay a modest fine to cover our operating costs for six months. But, for Christ’s sake, who ever told you we wanted to report the truth? Are you out of your mind?   

BD

 

Thu, 10/10/2013 - 22:20 | Link to Comment orangegeek
orangegeek's picture

This just keeps on getting better.

 

NY Fed is just a racket.  Who would have guessed?

Thu, 10/10/2013 - 22:24 | Link to Comment Teddy Tenpole
Teddy Tenpole's picture

not me

Thu, 10/10/2013 - 22:35 | Link to Comment Debt Slave
Debt Slave's picture

GS doing something wrong? Nonsense. GS is doing God's work, swindling the muppets.

Thu, 10/10/2013 - 22:49 | Link to Comment wisehiney
wisehiney's picture

Thank you Ms Segarra. That kind of integrity has its own rewards, does it not? To most people, their own petty selfishness is the most important thing. To a rare few, achieving a truly meaningful life is most imortant. Seldom will the world understand. But sometimes heroes are shown appreciation.....

http://www.washingtonpost.com/world/snowdens-father-arrives-in-moscow/20...

Thu, 10/10/2013 - 22:49 | Link to Comment Hubbs
Hubbs's picture

Maybe she should join forces with Karen Hudes.

http://www.youtube.com/watch?v=gHVgRgYdCsQ

Fri, 10/11/2013 - 02:26 | Link to Comment merizobeach
merizobeach's picture

Karen Hudes on RT: http://rt.com/shows/sophieco/world-bank-us-shutdown-820/

SS: You first blew the whistle over corruption in the World Bank. Tell us more about your revelations?

KH: Well, that’s actually what happened: I was working in the Philippines and there was a bank… this was at the end of the East Asia financial crisis in the end of the 1990s. And the second largest bank in the Philippines, the Philippine National Bank, there was a loan to strengthen the banking sector and, what happened, that there was a man who own Philippine airlines, Lucio Tan, who ended up buying more than 10% of the shares of the Philippine National Bank without informing the security authorities in the Philippines - that was against the law. And then I told the person who was in charge of the World Bank Lending Program that they should tell the government of the Philippines that the conditions of the loan were not going to be met. And instead I was reassigned, and I didn’t accept that, so I went to the meeting, where it was decided whether or not to disburse the loan and I said that the board was not being informed that the conditions were not met. And then what happened was the loan wasn’t disbursed, but the people who had their money on deposit in that bank withdrew their money and the Philippine Deposit Insurance Corp. had to withdraw, had to back up the bank, for five hundred million dollars, and then we didn’t disburse our loan for two hundred million and the Japanese didn’t disburse their loan for two hundred million. So, that was nine hundred million dollars worth of a poor loan performance and when the evaluation department in the World Bank said that the World Bank had performed satisfactorily, I corrected that report and my correction was never given to the board. That was a cover up. You can’t have a cover up in a bank - that shows that money is going the wrong way. I’ve been working together with other whistleblowers at the World Bank, because we know that the board has to be informed about what’s actually going on. Other whistleblowers have reported double accounting, we reported this to the UK Parliament, I reported it to the European Parliament in 2011 and the European Parliament wrote the letter to the World Bank. I had a very detailed chronology - and the World Bank never responded. Then I’ve been reporting this to the US Congress and when the US Congress was asked to give a capital increase to the World Bank, they had asked for a government accountability office audit which never took place. I was reporting this to the International Organization of Supreme Audit institutions and then I asked the board to require KPMG to do an audit of the World Bank Internal Controls. KPMG did not follow the auditing standards, so I reported this to the public company accounting oversight board, I reported this to the SEC. But since the SEC couldn’t be bothered to sort out the insider trading for the Federal Reserve System, they certainly weren’t going to straighten out the bonds in the World Bank. So I bought a World Bank bond and I sued under the securities laws, and I also went to each and every Attorney-General in the States, and I told the States that they were responsible for making sure that there was accurate financial information going to the bond holders in their States, and I also went to the International Organization of the Securities Commissioners. So, the World Bank has got to be brought into compliance and there has to be transparency in the capital markets, and the insider training of the Federal Reserve System is going to be history in short order.

Thu, 10/10/2013 - 23:02 | Link to Comment Constitutional ...
Constitutional Republic's picture

This young woman is  honest. A true citizen. I doubt that she realized she would also have to be brave, given that she was led to believe that it was her job to be honest, and then found herself vilified for all the wrong reasons.

The truth is the enemy of the state, said the Nazis, and many of their top people were imported to the USA under Operation Paperclip. Fact, figures and law are a paper thin facade in their hands.

 

Thu, 10/10/2013 - 22:56 | Link to Comment robertocarlos
robertocarlos's picture

She's beautiful! I hope she doesn't take hot-tub dips alone.

Thu, 10/10/2013 - 23:08 | Link to Comment WTFUD
WTFUD's picture

" they urged her to change her position " however unlike the majority of Goldman clients, ass fisting wasn't her meme.

Thu, 10/10/2013 - 23:33 | Link to Comment Coldfire
Coldfire's picture

The unspoken role of the regulator is to pretend to regulate. The unspoken role of compliance is to help them. Say goodbye to a career in compliance, regulation or finance, Carmen. In other words, happy days. Sincere good luck with your lawsuit.

Thu, 10/10/2013 - 23:36 | Link to Comment flyonmywall
flyonmywall's picture

All sycophants will do anything to get ahead, including compromising their principles to the point where they don't know what their principles are anymore. At that point, they will do anything for their master's approval. This is not any different than having a willing slave that will do anything for their master's approval. Ass fisting is just the start.

Fri, 10/11/2013 - 00:00 | Link to Comment W74
W74's picture

Kinda like how Imps and weaker demons submit to the stronger and nastier ones?  Yep, Goldman sounds like Hell.

So here's a question: Why on Earth would ANYONE do business with these fuckers?

Fri, 10/11/2013 - 00:24 | Link to Comment world_debt_slave
world_debt_slave's picture

be wary when Bernanke/Yellen give you a mercedes as a going away present

Fri, 10/11/2013 - 00:47 | Link to Comment knowshitsurelock
knowshitsurelock's picture

There is always free cheese in every mousetrap, but I'd sell the exploding Mercedes right away.

Fri, 10/11/2013 - 00:47 | Link to Comment chump666
chump666's picture

Wow!

It's kinda cool you have these female whistle-blowers in the finance industry.  It's a bullsh*t industry that has a male/female work ratio that is beyond discriminatory.  And suing the NY Fed!!! Awesome play.  NY Fed is the most shadowy crony central bank machine you could wish for.

 

 

Fri, 10/11/2013 - 01:32 | Link to Comment o2sd
o2sd's picture

The first rule about Goldman, is that you do NOT talk about Goldman.

The second rule about Goldman, is that YOU DO NOT TALK ABOUT GOLDMAN.

 

Fri, 10/11/2013 - 03:12 | Link to Comment Dr. Bonzo
Dr. Bonzo's picture

The Whistle Blowers are all the real deal. No medals, no parades no book deals or Hollyweird movies fawning over fake ass bullshit. No interviews, no Morning Show no White House invites. For their effort they get hunted down, fired, blacklisted, persecuted. Losing jobs, status, privileges.... lives even. They are willing to put it all on the line for the sake of their integrity, because their character will not indulge dishonestly and rampant immorality.

When you have a culture that's too FUCKED to recognize the real patriots, the real bedrock of morality and principle, you have no culture anymore.

A salute this young woman and wish a guillotine death on anyone who aided in her demise or profited from her downfall.

Fri, 10/11/2013 - 03:50 | Link to Comment JailBanksters
JailBanksters's picture

Should have gone to Ecuador before blowing the Whistle, your going to be done for Treason. Like all the other Blowers.

Fri, 10/11/2013 - 05:26 | Link to Comment theprofromdover
theprofromdover's picture

14. Once our squidlings have reached the top of the ladder, we move them into government to protect our interests.

Fri, 10/11/2013 - 07:05 | Link to Comment Peter Pan
Peter Pan's picture

What's the bet that Goldman Sachs took out a dead peasant policy on this poor young lady.

The NSA will have been bugging her.

And she won't be able to find a job.

They will make it very hard for her. They will let the case drag on and on and create a nightmare for her.

Decent Americans should set up a suport fund for such victims.

Fri, 10/11/2013 - 07:31 | Link to Comment JPMorgan
JPMorgan's picture

Your not paid to think and bring problems to light, you are paid to do as your told, shut your mouth and look the other way.

Goldman Sachs is a cancer of this planet.

 

Fri, 10/11/2013 - 07:34 | Link to Comment Peter Pan
Peter Pan's picture

Dear JPM,

The cancer you talk of is just one tentacle amongst many. They read our comments, they know who we are, they have made a decision as to what happens to us at the appropriate time and they are amused by our public remonstrations.

Their pockets may be infinitely deeper but they fail to understand that in the end a punishment beyond their expectation awaits them because immortality is not their domain but eternal damnation may well be.

Fri, 10/11/2013 - 07:57 | Link to Comment JPMorgan
JPMorgan's picture

Yeah they probably have a good laugh reading the articles and comments on ZH.

But I would expect nothing less from psychopaths.

Fri, 10/11/2013 - 09:01 | Link to Comment kenezen
kenezen's picture

Goldman is a favored group of this Presidency. It cannot be approached with negatives. Smart Politics.

Fri, 10/11/2013 - 09:22 | Link to Comment docj
docj's picture

In other news, Ms. Segarra is in the market for a food taster and a body guard. I can only imagine that the applications for those positions have been flooding in at a rate of -1 per day.

Fri, 10/11/2013 - 10:20 | Link to Comment chinaboy
chinaboy's picture

Cost of being honest.

Fri, 10/11/2013 - 13:34 | Link to Comment Crash Overide
Crash Overide's picture

Hidden elite power brokers own banks...

Banks own governments...

Governments own people...

You could present evidence of Goldman the FED, and JPM etc... selling children to politicians, stealing all the middle class wealth, breaking almost every regulation on the books and a laundry list of other soulless actions and NOTHING would happen.

Nothing will ever happen until the people of the world hold them accountable. Look at all the whistle blowers that have come forward, from HSBC money laundering to Snowden's NSA info, NOTHING has happened.

We all know the list of crimes is really long and the list of arrests is really short. It's basic math who's winning this one, not us.

Do NOT follow this link or you will be banned from the site!