Obama Appointee Dismisses an Obama Appointee's Whistleblower Lawsuit

by Sven Magnussen

The Honorable Ronnie Abrams, USDC for the SDNY, dismissed a wrongful termination lawsuit brought by Carmen Segarra, appointed as a Federal Reserve Bank of New York examiner by the Office of the Comptroller of Currency (OCC) in 2011. The OCC is a bureau within the United States Department of the Treasury established by the National Currency Act of 1863. The OCC regulates and supervises all national banks and thrift institutions and the federal branches and agencies of foreign banks in the United States. Judge Abrams was appointed by President Barack Obama and assumed office on March 23, 2012

The current Comptroller of the Currency for OCC is Thomas J. Curry. President Obama nominated Mr. Curry in July 2011. Mr. Curry served five Massachusetts Governors as the Commonwealth's Commissioner of Banks from 1990 to 1991 and from 1995 to 2003. Prior to becoming Comptroller of the Currency, Mr. Curry served as a Director of the FDIC since January 2004, and as the Chairman of the NeighborWorks® America Board of Directors.

Ms. Segarra secretly recorded conversations she had with managers in the Federal Reserve Bank of New York and Goldman Sachs in 2012. A transcript has been published by This American Life.

Ms. Segarra alleged in her lawsuit her Federal Reserve Bank supervisor, Jonathon J. Kim, assigned her the responsibility of examining specific Goldman Sachs transactions that included Solyndar, Capmark, and El Paso/Kinder Morgan. At the time, Mr. Kim was the Supervising Officer of Legal and Compliance Risks. Currently, Mr. Kim is an Assistant Vice President of the Federal Reserve Bank of New York in the Financial Institution Supervision Group. An appeal of Judge Abrams dismissal has been filed in the United States Circuit Court of Appeals for the Second Circuit has been filed on May 20, 2014.

Ms. Segarra's complaint alleged violations of 12 U.S.C. § 1231 and other unspecified laws prohibiting obstruction and interference with a bank examiner's examination and retaliation for her preliminary findings. Pursuant to 12 U.S.C. § 481 - Appointment of examiners; "The Comptroller of the Currency, with the approval of the Secretary of the Treasury, shall appoint examiners who shall examine every national bank as often as the Comptroller of the Currency shall deem necessary." In 2010, President Obama signed Pub. L. 111–203 into law to amend § 481 to subject the Comptroller of the Currency's appointments to to chapter 71 of title 5 of the U.S. Code, Labor Management Relations.

U.S. Senator Elizabeth Warren (D-MA) has called for congressional hearings into allegations the Federal Reserve Bank of New York. “Congress must hold oversight hearings on the disturbing issues raised by today’s whistleblower report when it returns in November, because it’s our job to make sure our financial regulators are doing their jobs,” Senator Warren said. Senator Warren added, “When regulators care more about protecting big banks from accountability than they do about protecting the American people from risky and illegal behavior on Wall Street, it threatens our whole economy. We learned this the hard way in 2008.”

The Federal Reserve Bank of New York responded by issuing a statement which, “categorically rejects the allegations being made about the integrity of its supervision of financial institutions.” In a statement posted on its website, “[T]he New York Fed works diligently to execute its supervisory authority in a manner that is most effective in promoting the safety and soundness of the financial institutions it is charged with supervising.”