Later On

A blog written for those whose interests more or less match mine.

“Justice” Wall-Street style

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Pam Martens writes in Wall Street on Parade:

On October 10, 2013, bank examiner Carmen Segarra and her attorney, Linda Stengle of Boyertown, Pennsylvania, took on one of the mightiest and interconnected institutions on Wall Street: the Federal Reserve Bank of New York. They relied on the Federal court system, funded by the taxpayer, and a fair and impartial judge to level the playing field. Things got off to a promising start.

Segarra was a bank examiner at the Federal Reserve Bank of New York, a key regulator of Wall Street banks. She charged in her lawsuit that when she turned in a negative assessment of Goldman Sachs, she was bullied and intimidated by colleagues at the New York Fed to change her findings. When she refused, she was terminated from her job in retaliation and escorted from the Fed premises, according to her lawsuit.

The case was assigned to Judge Ronnie Abrams, an Obama appointee, the daughter of constitutional law expert, Floyd Abrams, and sister to Dan Abrams, the well known legal affairs commentator on television.

Segarra also had a powerful whistleblower protection law on her side, designed specifically to include a bank examiner such as herself working for a Federal agency overseeing banks. The law is known as the Federal Deposit Insurance Act and codified as 12 U.S.C. 1831j. It was enacted to prevent the intimidation, discrimination or firing of employees involved in examining the safety and soundness of the U.S. financial system because they had found wrongdoing and reported it. A key section reads:

2) Employees of banking agencies

No Federal banking agency, Federal home loan bank, Federal reserve bank, or any person who is performing, directly or indirectly, any function or service on behalf of the Corporation may discharge or otherwise discriminate against any employee with respect to compensation, terms, conditions, or privileges of employment because the employee (or any person acting pursuant to the request of the employee) provided information to any such agency or bank or to the Attorney General regarding any possible violation of any law or regulation, gross mismanagement, a gross waste of funds, an abuse of authority, or a substantial and specific danger to public health or safety…

Segarra and Stengle scored an early, big win. The Judge ruled against the New York Fed’s efforts to seal parts of Segarra’s complaint and supporting documents. Then came two bizarre claims from the New York Fed.

On February 4, 2014, three lawyers representing the New York Fed filed a reply memorandum in the Segarra matter: Thomas C. Baxter, Jr., General Counsel and Executive Vice President of the New York Fed along with David Gross and Thomas Noone. The memorandum asserted the following:

“Goldman Sachs is Not a Depository Institution — Defendants also moved to dismiss the Section 1831j claim because that statute protects the provision of information about a ‘depository institution,’ not a holding company like Goldman Sachs. (Mov. Br. 11.) Plaintiff characterizes this as a ‘Phantom Distinction’ and a ‘red herring’ (Opp. Br. 5), but offers no analysis to dispute the plain meaning of the defined terms used in the statute. Instead, she observes that SR 08-8 applied to Goldman Sachs, and so it does not matter what ‘kind[] of banking entity’ Goldman Sachs is. (Id.) Plaintiff misses the point: Congress defined ‘depository institution’ and ‘depository institution holding company’ separately, and made Section 1831j applicable to the former but not the latter. (See Mov. Br. 11 n.10.) Because Plaintiff did not report a violation by a ‘depository institution,’ the Court must dismiss her ‘whistleblower’ allegations for failure to state a claim.”

Under the Federal Deposit Insurance Act, “the term ‘depository institution’ means any bank or savings association.” Goldman Sachs not only owns a commercial bank, but according to the FDIC, it owns an “insured depository institution,” which is defined as “any bank or savings association the deposits of which are insured by the Corporation pursuant to this Act.”

At this direct link from the FDIC, we see that Goldman Sachs Bank USA is a direct unit of Goldman Sachs Group, Inc., the bank holding company. We also see that the commercial bank has been insured by the FDIC since November 28, 2008 and its regulator is the Federal Reserve Board. If you click on the “Financials” tab, we learn that it holds $64,289,000 in deposits and has locations in five states. Under the “History” tab, it changed its status to “commercial bank” on November 28, 2008.

The lawyers for the New York Fed continued to press this “not a depository institution” theme before the court, triggering a letter response from Segarra’s attorney, Linda Stengle, who wrote to the court as follows: . . .

Continue reading.

Our judiciary system is being badly corrupted, beginning with SCOTUS. Later in the article:

How big a retainer the Judge’s husband has received from Goldman Sachs and when he received it is a side issue. The larger issue is that Goldman Sachs is a huge, long term client at Davis Polk and the Judge’s husband is a partner at the firm. Per the sampling below, deals totaling over $9 billion have been handled by Davis Polk on behalf of Goldman Sachs in just the past two years.

Written by Leisureguy

8 May 2014 at 11:19 am

Posted in Business, Government, Law

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