The story's most intriguing case study involves a deal Goldman made with Spanish bank Santander. It illustrates the Fed's vacillating approach to regulation. In January of 2012, Goldman informed Segarra and her superiors that it was about to complete a transaction in which the Spanish lender would transfer shares in its Spanish subsidiary to Goldman, which would receive $40 million in fees, and big commissions from trading those shares. The motive was no secret: Santander was under pressure to raise its capital ratios, and the transfer was, in effect, a strategy designed to make its liquidity look better to regulators.
The Fed's regulators at Goldman thought the deal was a gimmick to make Santander appear healthier than it really was. The team's chief actually called the arrangement "fraudulent," but says that the Fed's general counsel overruled him, insisting it was perfectly legal. The team couldn't even agree on how to express its displeasure to Goldman. They discussed detailing their objections in an official letter, but it's unclear if the letter was ever sent. The examiners mainly congratulated themselves on "putting them through their paces" so that Goldman wouldn't do anything that allegedly dodgy in the future.
Fortune
The Fed's regulators at Goldman thought the deal was a gimmick to make Santander appear healthier than it really was. The team's chief actually called the arrangement "fraudulent," but says that the Fed's general counsel overruled him, insisting it was perfectly legal. The team couldn't even agree on how to express its displeasure to Goldman. They discussed detailing their objections in an official letter, but it's unclear if the letter was ever sent. The examiners mainly congratulated themselves on "putting them through their paces" so that Goldman wouldn't do anything that allegedly dodgy in the future.
Fortune
