Here's the Second Circuit decision on the Carmen Segarra case.  She alleged that the Fed was too soft on Goldman Sachs, and secretly taped meetings between regulators and the bank in an effort to prove it.  And in some ways, she has influenced the policy debate more than you'd think any low level, very briefly employed bank examiner would, so she's already won something.

She lost her whistleblower suit, but that's not even a huge indictment of her.  She lost it because she tried to pull herself within the confines of the bank whistleblower statute by alleging that the Fed, and her supervisors (and her), were performing a service for the FDIC when they examined Goldman Sachs. The statute says, in the court's words, "if an individual is subject to liability under this statute, he or she must be '[a] person who is performing, directly or indirectly, [a] function or service on behalf of the [FDIC]."  The court said that it was "frankly silly" to suggest that Fed employees were working for the FDIC.  Put that way, it sort of sounds silly.

Is it so obvious, though?  In a complaint?  The purpose of the statute is to protect whistleblowers who work at among other things "Federal reserve bank[s]" who bring information to light about "gross mismanagement" in a way which performs a service to the FDIC, which (I think, the court didn't say) might insure Goldman (but wouldn't, I guess, if it doesn't have depositors; it is a bank holding company), would be involved in any trigger of orderly liquidation authority under Title II of Dodd-Frank, and, as a voting member of the Financial Stability Oversight Council, arguably oversees SIFIs, of which Goldman is one.  Segarra alleges that Goldman Sachs didn't have a conflict of interest policy, and her job was to examine the firm for safety and soundness.  The statute is supposed to be broadly construed.  Although I haven't yet been too convinced by Segarra, her argument is plausible enough.  One judge, who maybe agreed, but may be worried about the prospect of every bank examiner reporting, quitting, and suing, once wrongdoing is uncovered uttered a terse "I concur in the result."

Segarra's lawyers don't look classy, and her damages request was nuts, but I'm not quite sure why her claim has been given the back of the hand quite so tersely, in a per curiam opinion that doesn't enjoy the the support of all three members of the court.  And do let me know if I've missed something.

Post updated to clarify the FDIC-Goldman relationship

Another update - here's the district court opinion, which is more articulate about the problems with the complaint.  Courts don't like to regulate banking supervision, and the district court depends on a conclusion that banking regulation is very informal, which would make a claim that a bank is ignoring a recommendation from supervisors not the same thing as a bank violating the law. It would have been nice if the Second Circuit had evaluated that part of the opinion, given that banking regulation is generally extremely informal.  It's not clear to me that Congress didn't want whistleblowers to police this sort of supervision.

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