In the new order, risk specialists were now responsible for their own examinations. No longer would the business-line specialists control the process. What Segarra discovered, however, was that the roles had not been clearly defined, allowing the tensions Beim had detailed to fester.
Segarra said she began to experience pushback from the business-line specialists within a month of starting her job. Some of these incidents are detailed in her lawsuit, recorded in notes she took at the time and corroborated by another examiner who was present.
Business-line specialists questioned her meeting minutes; one challenged whether she had accurately heard comments by a Goldman executive at a meeting. It created problems, Segarra said, when she drew on her experiences at other banks to contradict rosy assessments the business-line specialists had of Goldman's compliance programs. In the recordings, she is forceful in expressing her opinions.
ProPublica and This American Life reached out to four of the business-line specialists who were on the Goldman team while Segarra was there to try and get their side of the story. Only one responded, and that person declined a request for comment. In the recordings, it's clear from her interactions with managers that Segarra found the situation upsetting, and she did not hide her displeasure. She repeatedly complains about the business-line specialists to Kim, her legal and compliance manager, and other supervisors.
"It's like even when I try to explain to them what my evidence is, they won't even listen," she told Kim in a recording from Jan. 6, 2012. "I think that management needs to do a better job of managing those people."
Kim let her know in the meeting that he did not expect such help from the Fed's top management. "I just want to manage your expectations for our purposes," he told Segarra. "Let's pretend that it's not going to happen."
Instead, Kim advised Segarra "to be patient" and "bite her tongue." The New York Fed was trying to change, he counseled, but it was "this giant Titanic, slow to move."
Three days later, Segarra met with her fellow legal and compliance risk specialists stationed at the other banks. In the recording, the meeting turns into a gripe session about the business-line specialists. Other risk specialists were jockeying over control of examinations, too, it turned out.
"It has been a struggle for me as to who really has the final say about recommendations," said one.
"If we can't feel that we'll have management support or that our expertise per se is not valued, it causes a low morale to us," said another.
On Feb. 21, 2012, Segarra met with her manager, Kim, for their weekly meeting. After covering some process issues with her examinations, the recordings show, they again discussed the tensions between the two camps of specialists.
Kim shifted some of the blame for those tensions onto Segarra, and specifically onto her personality: "There are opinions that are coming in," he began.
First he complimented her: "I think you do a good job of looking at issues and identifying what the gaps are and you know determining what you want to do as the next steps. And I think you do a lot of hard work, so I'm thankful," Kim said. But there had been complaints.
She was too "transactional," Kim said, and needed to be more "relational."
"I'm never questioning about the knowledge base or assessments or those things; it's really about how you are perceived," Kim said. People thought she had "sharper elbows, or you're sort of breaking eggs. And obviously I don't know what the right word is."
Segarra asked for specifics. Kim demurred, describing it as "general feedback."
In the conversation that followed, Kim offered Segarra pointed advice about behaviors that would make her a better examiner at the New York Fed. But his suggestions, delivered in a well-meaning tone, tracked with the very cultural handicaps that Beim said needed to change.
Kim: "I would ask you to think about a little bit more, in terms of, first of all, the choice of words and not being so conclusory."
Beim report: "Because so many seem to fear contradicting their bosses, senior managers must now repeatedly tell subordinates they have a duty to speak up even if that contradicts their bosses."
Kim: "You use the word 'definitely' a lot, too. If you use that, then you want to have a consensus view of definitely, not only your own."
Beim report: "An allied issue is that building consensus can result in a whittling down of issues or a smoothing of exam findings. Compromise often results in less forceful language and demands on the banks involved."
In Segarra's recordings, there is some evidence to back Kim's critique. Sometimes she cuts people off, including her bosses. And she could be brusque or blunt.
A colleague who worked with Segarra at the New York Fed, who does not have permission from their employer to be identified, told ProPublica that Segarra often asked direct questions. Sometimes they were embarrassingly direct, this former examiner said, but they were all questions that needed to be asked. This person characterized Segarra's behavior at the New York Fed as "a breath of fresh air."
ProPublica also reached out to three people who worked with Segarra at two other firms. All three praised her attitude at work and said she never acted unprofessionally.
In the meeting with Kim, Segarra observed that the skills that made her successful in the private sector did not seem to be the ones that necessarily worked at the New York Fed.
Kim said that she needed to make changes quickly in order to succeed.
"You mean, not fired?" Segarra said.
"I don't want to even get there," Kim responded.
It would be unfair to fire her, Segarra offered, since she was doing a good job.
"I'm here to change the definition of what a good job is," Kim said. "There are two parts to it: Actually producing the results, which I think you're very capable of producing the results. But also be mindful of enfolding people and defusing situations, making sure that people feel like they're heard and respected."
Segarra had thought her job was simple: Follow the evidence wherever it led. Now she was being told she had to "enfold" business-line specialists and "defuse" their objections.
"What does this have to do with bank examinations," Segarra wondered to herself, "or Goldman Sachs?"
Segarra worked on her examination of Goldman's conflict-of-interest policies for nearly seven months. Her mandate was to determine whether Goldman had a comprehensive, firm-wide conflicts-of-interest policy as of Nov. 1, 2011.
Segarra has records showing that there were at least 15 meetings on the topic. Silva or Kim attended the majority. At an impromptu gathering of regulators after one such meeting early that December, her contemporaneous notes indicate Silva was distressed by how Goldman was dealing with conflicts of interest.
By the spring of 2012, Segarra believed her bosses agreed with her conclusion that Goldman did not have a policy sufficient to meet Fed guidance.
During her examination, she regularly talked about her findings with fellow legal and compliance risk specialists from other banks. In April, they all came together for a vetting session to report conclusions about their respective institutions. After a brief presentation by Segarra, the team agreed that Goldman's conflict-of-interest policies didn't measure up, according to Segarra and one other examiner who was present.
In May, members of the New York Fed team at Goldman met to discuss plans for their annual assessment of the bank. Segarra was sick and not present. Silva recounts in an email that he was considering informing Goldman that it did not have a policy when a business-line specialist interjected and said Goldman did have a conflict-of-interest policy – right on the bank's website.
In a follow-up email to Segarra, Silva wrote: "In light of your repeated and adamant assertions that Goldman has no written conflicts of interest policy, you can understand why I was surprised to find a "Conflicts of Interests Section" in Goldman's Code of Conduct that seemed to me to define, prohibit and instruct employees what to do about it."
But in Segarra's view, the code fell far short of the Fed's official guidance, which calls for a policy that encompasses the entire bank and provides a framework for "assessing, controlling, measuring, monitoring and reporting" conflicts.
ProPublica sent a copy of Goldman's Code of Conduct to two legal and compliance experts familiar with the Fed's guidance on the topic. Both did not want be quoted by name, either because they were not authorized by their employer or because they did not want to publicly criticize Goldman Sachs. Both have experience as bank examiners in the area of legal and compliance. Each said Goldman's Code of Conduct would not qualify as a firm-wide conflicts of interest policy as set out by the Fed's guidance.
In the recordings, Segarra asks Gwen Libstag, the executive at Goldman who is responsible for managing conflicts, whether the bank has "a definition of a conflict of interest, what that is and what that means?"
"No," Libstag replied at the meeting in April.
Back in December, according to meeting minutes, a Goldman executive told Segarra and other regulators that Goldman did not have a single policy: "It's probably more than one document – there is no one policy per se."
Early in her examination, Segarra had asked for all the conflict-of-interest policies for each of Goldman's divisions as of Nov. 1, 2011. It took months and two requests, Segarra said, to get the documents. They arrived in March. According to the documents, two of the divisions state that the first policy dates to December 2011. The documents also indicate that policies for another division were incomplete.
ProPublica and This American Life sent Goldman Sachs detailed questions about the bank's conflict-of-interest policies, Segarra and events in the meetings she recorded.
In a three-paragraph response, the bank said, "Goldman Sachs has long had a comprehensive approach for addressing potential conflicts." It also cited Silva's email about the Code of Conduct in the statement, saying: "To get a balanced view of her claims, you should read what her supervisor wrote after discovering that what she had said about Goldman was just plain wrong."
Goldman's statement also said Segarra had unsuccessfully interviewed for jobs at Goldman three times. Segarra said that she recalls interviewing with the bank four times, but that it shouldn't be surprising. She has applied for jobs at most of the top banks on Wall Street multiple times over the course of her career, she said.
The audio is muddy but the words are distinct. So is the tension. Segarra is in Silva's small office at Goldman Sachs with his deputy. The two are trying to persuade her to change her view about Goldman's conflicts policy.
"You have to come off the view that Goldman doesn't have any kind of conflict-of- interest policy," are the first words Silva says to her. Fed officials didn't believe her conclusion — that Goldman lacked a policy — was "credible."
Segarra tells him she has been writing bank compliance policies for a living since she graduated from law school in 1998. She has asked Goldman for the bank's policies, and what they provided did not comply with Fed guidance.
"I'm going to lose this entire case," Silva says, "because of your fixation on whether they do or don't have a policy. Why can't we just say they have basic pieces of a policy but they have to dramatically improve it?"
It's not like Goldman doesn't know what an adequate policy contains, she says. They have proper policies in other areas.
"But can't we say they have a policy?" Silva says, a question he asks repeatedly in various forms during the meeting.
Segarra offers to meet with anyone to go over the evidence collected from dozens of meetings and hundreds of documents. She says it's OK if higher-ups want to change her conclusions after she submits them.
But Silva says the lawyers at the Fed have determined Goldman has a policy. As a comparison, he brings up the Santander deal. He had thought the deal was improper, but the general counsel reined him in.
"I lost the Santander transaction in large part because I insisted that it was fraudulent, which they insisted is patently absurd," Silva said, "and as a result of that, I didn't get taken seriously."
Now, the same thing was happening with conflicts, he said.
A week later, Silva called Segarra into a conference room and fired her. The New York Fed, he told Segarra, who was recording the conversation, had "lost confidence in [her] ability to not substitute [her] own judgment for everyone else's."
For more coverage, see ProPublica’s previous reporting on Segarra, the El Paso-Morgan deal and Goldman’s conflict of interest policies and predicaments. You can read David Beim’s 2009 report here.
Producer Brian Reed of This American Life contributed reporting to this story. ProPublica intern Abbie Nehring contributed research.
