Aggadah in the Bavli
The Talmudic center in the land of Israel produced a very wide range of literarily complex exegesis on the Bible. This work, known collectively as Aggada, usually combines close reading of the biblical text, moral instruction and literary devices. Amoraic Aggada found, to a certain degree, in the Palestinian Talmud, but mostly in discrete works devoted exclusively to this genre - Genesis Rabba, Leviticus Rabba, Tanhuma-Yelammedenu and so on.
The Babylonian center, during the same period, produced only one work - the Babylonian Talmud. Which does not contain a great deal of comparable material in the field of aggada. Segal's claim is that the Babylonian amoraim were in the habit of taking aggadic homilies from Israel, stripping them of their literary structure, and presenting them as simple exegetical comments on the Bible.
Sometimes, they would expand these comments into binary controversies. For example, Rav and Shmuel are presented as disagreeing whether the "new king" described in Exodus 1:8 is really a new king, or an old king with a new policy. The idea of the "old king with new policy" is rooted in a homiletical link between Exodus 1:8 and Hosea 5:7, as can be seen in various versions of the Tanhuma. But the Bavli was not interested in the link, or the larger context, but only in the exegetical novelty of it. And, to balance it out, the Bavli added an opposing position, that Pharoah really was a new king.