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The Federal Reserve and Goldman Sachs: C...

Hernandez, Morela,...

Case

The Federal Reserve and Goldman Sachs: Carmen Segarra

Hernandez, Morela; Parmar, Bidhan L.; Mead, Jenny

OB-1079 | Published November 24, 2015 | 8 pages Case

Collection: Darden School of Business

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Carmen Segarra, a recently hired bank examiner in the NY Fed's supervisory office for Goldman Sachs, strongly disagrees with her supervisor, Mike Silva, about whether Goldman Sachs has a viable overall conflict-of-interest policy. Silva says "yes," and Segarra says "no." This issue is the latest in which Segarra sees what she considers regulatory capture in the NY Fed/Goldman Sachs's relationship. An independent report had been critical of the NY Fed for being too cozy with the banking institutions it regulated and suggested hiring more aggressive and vocal examiners. Segarra realizes that her aggressive and frank communication style has irritated both Silva and others in their department but is determined to do her job. The tension between Silva and Segarra has reached a breaking point and Segarra must decide what actions she must take to address both the tension and what she considers regulatory capture. A teaching note accompanies this case and details how it is taught in Darden's ethics and leadership courses.

1. Introduce students to the challenges of responsible leadership. 2. Understand the complex dynamics of "leading up." 3. Explore the tradeoffs leaders are required to make to balance different stakeholder interests, both within and outside organizations.