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Inside
the New York Fed: Secret Recordings and a Culture Clash
by Jake
Bernstein ProPublica, Sep.
26, 2014, 5 a.m.
A confidential report and a fired examiner’s
hidden recorder penetrate the cloistered world of Wall Street’s top
regulator—and its history of deference to banks.
Update: Senators react,
Goldman changes conflicts of interest policy.
ProPublica Notes:
Our Publishing Partner
This story was co-published with This American Life, from
WBEZ Chicago.
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now.
**************************
Barely a year removed from the devastation of the 2008
financial crisis, the president of the Federal Reserve Bank of New York faced a
crossroads. Congress had set its sights on reform. The biggest banks in the
nation had shown that their failure could threaten the entire financial system.
Lawmakers wanted new safeguards.
The Federal Reserve, and, by dint of its location off Wall
Street, the New York
Fed, was the logical choice to head the effort. Except it had
failed miserably in catching the meltdown.
New York Fed President William Dudley had to answer two
questions quickly: Why had his institution blown it, and how could it do
better? So he called in an outsider, a Columbia University
finance professor named David Beim, and granted him
unlimited access to investigate. In exchange, the results would remain secret.
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