Whistleblower tapes revealed the weakness of the New York Federal Reserves oversight of Wall Street and big US banks.  Senators Elizabeth Warren and Sherrod Brown call for investigation.

Warren and Brown, both members of the Senate Banking Committee, called for an investigation of the New York Fed after Carmen Segarra, a former examiner at the bank, released secretly recorded tapes that she claims show her superiors telling her to go easy on private banks. Segarra says that she was fired from her job in 2012 for refusing to overlook Goldman’s lack of a conflict of interest policy and other questionable practices that should have brought tougher regulatory scrutiny.

“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,” Warren said in a statement on Friday. “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.”

In an interview with This American Life and ProPublica, Segarra described numerous instances in which she said she alerted her bosses to questionable practices at Goldman. In one instance, she said she alerted a colleague that a senior compliance officer at Goldman had said that the bank’s view was that “once clients became wealthy enough, certain consumer laws didn’t apply to them.” Segarra claims that her New York Fed colleagues asked her to ignore the remark and change meeting minutes she had taken, which contained evidence of what the Goldman executive said.

New York Fed presdient WIlliam Dudley gently demanded a change of culture, but this won’t do the job.  We need muscle behind bank reform.