ELIZABETH WARREN: The Secret New York Fed Tapes Confirm The Game Is Rigged
Warren told NPR's Steve Inskeep that the report, "ultimately this report tells us exactly what we already knew - that the relationship between regulators and the financial institutions they oversee is too cozy to provide the kind of tough oversight that's really needed."Last week, a report from ProPublic and This American Life released secret audio recordings from former New York Fed official Carmen Segarra that appeared to showed disagreements and dysfunction among Fed officials stationed inside Goldman Sachs. Advertisement
Listening to the tapes, Warren said two things jumped out: the lack of truthful reporting and the emphasis by Fed officials on talk over action.
"You know, the regulators seemed to think that it was a victory just to raise an issue, even if they took absolutely no action to address the issue," Warren said. "And that's the kind of approach that allowed banks to take on massive risks before the financial crisis. You know, think about that: The regulators seemed to think that fussing at banks behind closed doors was their toughest sanction. Does anyone believe that Goldman Sachs is gonna give up a deal that would yield millions of dollars because someone fussed at them behind closed doors?"Warren also said the issue of bank regulation is "already a campaign issue."
Warren said:The way I see this, for everybody who's running right now in 2014, there's a fundamental question of whose side you stand on. You know, the game out there is rigged, and people across this country really get it. And the Goldman Sachs tapes just show it one more time. Little banks have to follow the rules, regular families have to follow the rules, but big financial institutions? Somehow they can manage just to push their regulators aside and go forward.Advertisement
There's a - there's a fundamental question about who this country works for. It can't just work for those who already have lots of money and lots of power. We've got to have a country that works for everybody else.
Warren, a former consumer advocate and a rumored presidential candidate in 2016, is one of the most vocal and critical members of congress regarding financial regulation.Back in July, Warren issued a direct challenge to Fed chair Janet Yellen on the enforcement of the "living will" provision in the Dodd-Frank Act, which prompted the Fed to act.Advertisement
It remains to be seen what Warren does in the wake of this report and the surfacing of these tapes from inside the Fed and Goldman Sachs.