Mike Silva, the NY Fed's senior supervisory officer for Goldman Sachs, is having trouble with Carmen Segarra, a recently hired bank examiner who reports to Silva. The two disagree about whether Goldman Sachs has a viable overall conflict-of-interest policy; Silva says “yes,” and Segarra says “no.” Segarra's communication style—aggressive and frank—has irritated both Silva and others in their department, although an independent report had been critical of the NY Fed for being too cozy with the banking institutions it regulated. The tension between Silva and Segarra has reached a breaking point, and Silva must decide how to handle Segarra and whether to fire her. A teaching note accompanies this case and details how it is taught in Darden's ethics and leading organizations courses. Excerpt UVA-OB-1078 Rev. Mar. 15, 2016 The Federal Reserve and Goldman Sachs: Mike Silva As Mike Silva watched Carmen Segarra leave his office, he felt his headache intensifying. It was early 2012, and Silva, the Federal Reserve Bank of New York's (NY Fed) senior supervisory officer for Goldman Sachs, had just had one of many combative arguments with Segarra, recently hired as a NY Fed bank examiner assigned to Goldman Sachs. Segarra was highly skilled, but she had an aggressive and vociferous personality, which had rubbed some of her colleagues the wrong way and threatened to disrupt the somewhat delicate relationship between Silva's division and Goldman Sachs. Both Silva and Segarra's immediate supervisor had talked to her about toning down her criticism, both of the NY Fed's management and also of Goldman Sachs's policies, but to no avail. The issue at the center of the morning's argument was Goldman Sachs's compliance policy. Segarra claimed that Goldman Sachs did not have a company-wide conflict-of-interest policy. Silva disagreed; although it was an imperfect and somewhat chopped-up policy, Silva believed it was nonetheless a policy. He had told her that, as a legal matter, a company or organization could have a policy that was not in writing. No matter what he said, Segarra refused to change her mind or compromise on the issue. The relationship between regulators and financial institutions was complicated, and Silva worried that Segarra's vocal complaints might inject a hostile tone into his division's relationship with Goldman Sachs. After all, this particular division was actually embedded in the bank itself, as was customary with NY Fed regulators and the institutions they oversaw. Silva was not sure what to do; his approach to his job was collaborative, but Segarra's was confrontational. Mike Silva A 1983 graduate of the United States Naval Academy, Mike Silva had served in the U.S. Navy from 1983 through 1989 as an F14A Naval Flight Officer, graduating in 1985 from the Navy Fighter Weapons School (the program depicted in the 1986 movie “Top Gun”). He left the Navy to attend Columbia Law School. After graduating from Columbia in 1992, Silva joined the NY Fed as a law clerk. He held a number of different positions and rose through the ranks, first in legal and then in the executive group. In the mid-2000s, Silva was appointed by NY Fed President Timothy Geithner as chief of staff and vice president for its executive group. In the early 2000s, Silva had served as a coalition advisor to the Central Bank of Iraq, a role for which he received two awards: a Department of Defense Joint Civilian Service Medal and the Secretary of the Tre