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.
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The Fed’s denial that Goldman Sachs owned an FDIC insured depository institution was far more than just a “red herring” – it was a serious misrepresentation to the court. We must assume that lawyers at Goldman Sachs were following this case closely, and yet, for some reason, no one saw fit to dial up the New York Fed and point out their error. (While the Judge did not use this line of reasoning to dismiss Segarra’s case, it was mentioned in the decision and may have clouded the court’s understanding of the case.)
The law, in fact, covers misdeeds at Segarra’s own agency as well with this wording: “any depository institution or any such bank or agency.”
Next, the lawyers for the New York Fed told the court that the whistleblower law only covered laws or regulations and the issue raised by Segarra was governed by just an “advisory letter.”
The court, at this point, should have stepped back and reflected on the following: just five years ago, the U.S. taxpayer was called in to spew hundreds of billions of dollars into Wall Street’s teetering banks because of lax regulators seeking revolving door pay packages instead of conscientious oversight of toxic, over-leveraged gaming casinos. (As we pointed out in
Part I of this article yesterday, the hubris at the New York Fed is a key part of this big picture.) The toll of that financial collapse lingers to this day in subpar economic growth and joblessness across America.
If this Federal Court allowed a regulator to twist a Federal whistleblower law inside out and upside down, it would be sending a chilling message to every other bank examiner in America: keep your mouth shut or you too can be fired with impunity.
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It is surely “gross mismanagement” for the New York Fed to fire a bank examiner for reporting a violation at Goldman Sachs; it is surely “an abuse of authority” for a Federal regulator to tolerate the bullying of a bank examiner to get her to change her review of a bank; it is certainly a “substantial and specific danger” to the public safety of our financial system to grant regulators impunity to fire whistleblowing bank examiners.
