Your Money: Fired Fed worker seeks to reveal bank practices

If you have ever wondered what it would be like to take on one of the world's most powerful banks - all by yourself - meet Carmen Segarra.

Segarra, 41, filed a wrongful termination lawsuit against the New York Federal Reserve Bank this month, alleging she was fired last year after she determined that Goldman Sachs Group Inc., a Fed member bank, did not have adequate conflict-of-interest policies.

The New York Fed last week tried to have the case and some of Segarra's exhibits sealed, including e-mails, to keep the matter under wraps.

Segarra's lawyer, Linda Stengle, is based in Boyertown, Berks County, specializing in whistleblower cases. This week, Stengle successfully argued in front of a federal judge to keep her client's case unsealed and transparent for public view.

"They tried to redact my complaint," Segarra said in an interview. "It was not a move toward truth and transparency. The Fed is trying to protect the banks and not execute their mandate of appropriate supervision."

Since she has filed her suit, Segarra has received "overwhelmingly positive" responses from colleagues and others too afraid to blow the whistle themselves, she said.

The man on the street likely doesn't realize that the Federal Reserve is a corporation, more like Fannie Mae or Freddie Mac than the Environmental Protection Agency.

The Fed is not a government agency - not even close - and Segarra's lawsuit reveals it is a private system of banks that close ranks to protect powerful members.

The New York Fed, where she worked, is so closely entwined with its member banks on Wall Street, such as Goldman Sachs, that the Fed was willing to fire her rather than allow her doubts about Goldman's policies to be revealed, she alleged.

Federal Reserve banks are not government agencies; they have been open during the government shutdown. They have private boards of directors, appointed by member banks in each Fed district.

And they are not happy that Segarra is unveiling the way they do business.

"I wouldn't do it unless I thought I had more than enough evidence. My lawsuit speaks for itself," Segarra contended.

The suit is 13:civ 7173 Segarra v. Federal Reserve Bank of New York. Stengle expects the New York Fed to file its response within a few weeks. We'll keep you updated.