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Although lawmakers were ostensibly there to discuss the nominations to lead the Consumer Financial Protection Bureau and the Securities and Exchange Commission, the debate over "too big to jail" continued to dominate a Senate Banking Committee hearing on Tuesday.
March 12 -
Senate Banking Committee members took turns Thursday questioning several top financial regulators on the implementation of Dodd-Frank, but freshman Sen. Elizabeth Warren turned up the heat on the lack of bank prosecutions.
February 14 -
Deferred prosecution agreements involving HSBC's money laundering scandal and similar cases have practical advantages. But they also raise concerns that big banks are getting off easier than small ones.
January 22
WASHINGTON Sen. Elizabeth Warren is raising more questions about whether regulators or the Department of Justice have conducted any analysis into the trade-offs of settling an enforcement action without requiring an admission of guilt versus going to trial.
The Massachusetts Democrat asked Federal Reserve Board Chairman Ben Bernanke, Securities and Exchange Commission Chairman Mary Jo White, and Attorney General Eric Holder in a letter Tuesday about any research their offices had done on the issue. She said she submitted the same question to Comptroller of the Currency Thomas Curry following a February hearing, noting that the OCC recently replied that it has not completed any such analysis.
Concerns over deferred prosecution agreements, in which institutions agree to make changes in exchange for not having charges filed in court, have been growing in the wake of several recent bank scandals, including HSBC's $1.92 billion settlement in December over money laundering and sanctions violations.
"There is no question that settlements, fines, consent orders, and cease and desist orders are important enforcement tools, and that trials are expensive, demand numerous resources, and are often less preferable than settlements," Warren said in the May 14 letter. "But I believe strongly that if a regulator reveals itself to be unwilling to take large financial institutions all the way to trial either because it is too timid or because it lacks resources the regulator has a lot less leverage in settlement negotiations and will be forced to settle on terms that are more favorable to the wrongdoer."
She added: "The consequence can be insufficient compensation to those who are harmed by illegal activity and inadequate deterrence of future violations. If large financial institutions can break the law and accumulate millions in profits and, if they get caught, settle by paying out of those profits, they do not have much incentive to follow the law."
