Carmen Segarra is a former FTC regulator who joined the fed after the financial crisis to help rescue the banking system — but she was so shocked by the naked regulatory capture on display that she ended up buying a covert recorder from a "spy shop" and used it to secretly record her colleagues letting Goldman Sachs get away with pretty much anything it wanted to do.

Segarra has an impressive bio — speaks four language, degrees from Cornell, Harvard and Columbia, worked as a compliance officer at some of the world's biggest banks. She joined the Fed in the wake of the 2009 Report on Systemic Risk and Bank Supervision, a shocking and frank assessment by the Fed itself, documenting its deference to and regulatory capture by the banks it was supposed to be regulating, a deference and capture that allowed the subprime crisis to unfold under its own nose.

The Fed had vowed to reform this culture, and Segarra was supposed to be part of that mission. But once she reported for work at the Fed department at Goldman Sachs (Fed regulators actually work at desks inside the banks they're regulating), she discovered a culture rotten with cowardice and capture, where her boss's idea of a really stern rebuke for lying in official filings was to mildly mention that there appeared to be some irregularities in the compliance regime, then trailing off ineffectually.

We know this because of the recordings, which were edited into a documentary by This American Life that aired yesterday. It's an absolutely riveting and essential hour of audio (MP3), and the accompanying package by Pro Publica is likewise essential reading.

Segarra was ultimately fired. She claims it was because she had refused to cover up the fact that Goldman literally had no conflict-of-interest rules — not only a legal requirement for the bank, but also extremely important given its history of being on both sides of deals, screwing its clients and pocketing millions for itself.

Her wrongful dismissal case was initially dismissed on technical grounds, and she's gone back for another try. But as the report makes clear, regardless of the outcome of that case, there's absolutely no question that Segarra's recordings document a sick, weak regulator whose lack of transparency and accountability have translated into complicity with enormous, system-threatening corruption.

Segarra ultimately recorded about 46 hours of meetings and conversations with her colleagues. Many of these events document key moments leading to her firing. But against the backdrop of the Beim report, they also offer an intimate study of the New York Fed's culture at a pivotal moment in its effort to become a more forceful financial supervisor. Fed deliberations, confidential by regulation, rarely become public. The recordings make clear that some of the cultural obstacles Beim outlined in his report persisted almost three years after he handed his report to Dudley. They portray a New York Fed that is at times reluctant to push hard against Goldman and struggling to define its authority while integrating Segarra and a new corps of expert examiners into a reorganized supervisory scheme. Segarra became a polarizing personality inside the New York Fed — and a problem for her bosses — in part because she was too outspoken and direct about the issues she saw at both Goldman and the Fed. Some colleagues found her abrasive and complained. Her unwillingness to conform set her on a collision course with higher-ups at the New York Fed and, ultimately, led to her undoing. In a tense, 40-minute meeting recorded the week before she was fired, Segarra's boss repeatedly tries to persuade her to change her conclusion that Goldman was missing a policy to handle conflicts of interest. Segarra offered to review her evidence with higher-ups and told her boss she would accept being overruled once her findings were submitted. It wasn't enough.

536: The Secret Recordings of Carmen Segarra [This American Life]

Inside the New York Fed: Secret Recordings and a Culture Clash [Jake Bernstein/Pro Publica]