- Senator Brown demands details on enforcement cases in letter
- Review follows lawmaker complaints over banks' recidivism
The top Democrat on the U.S. Senate Banking Committee is conducting a wide-ranging inquiry into Wall Street’s compliance with government enforcement settlements, following complaints that banks keep getting in trouble after being punished by regulators.
Ohio Senator Sherrod Brown sent letters to more than a dozen major banks last week, requesting details on legal judgments they have entered into with 15 agencies, dating back to 2005. While it doesn’t specifically say what the focus of the investigation is, many of the demands relate to whether banks are regularly running afoul of laws and regulations.
The Democratic staff is looking into “enforcement actions” stemming from violations of “U.S. antitrust, banking, consumer, fraud, housing, securities or tax laws,” Brown wrote in the letter.
The probe adds new heft to concerns that some lawmakers and regulators have been raising about banks’ recidivism. The issue has burned particularly hot at the Securities and Exchange Commission, where the agency’s commissioners have fought over whether to tack on additional punishments to firms that have repeatedly settled cases with regulators.
Along with Brown, Senator Elizabeth Warren has been a frequent critic of the government’s Wall Street cases, and has especially pushed the Justice Department and financial agencies to stiffen sanctions for firms that are repeat offenders.
Brown’s missive went to the largest U.S. and foreign-based banks, including JPMorgan Chase & Co., Citigroup Inc., Morgan Stanley, Goldman Sachs Group Inc., Bank of America Corp., Credit Suisse Group AG and Deutsche Bank AG, according to people familiar with the matter who asked not to be named because the letters aren’t public. Spokesmen for the banks declined to comment.
The four pages of questions ask for information about the amount of legal fees banks paid, the names and positions of all employees subject to sanctions and any non-public agreements made with government enforcement agencies. Brown also asked for details on compliance programs and initiatives by boards of directors that were instituted after settlements.
Most troubling to the banks, the people said, is that Brown’s staff investigator Bob Roach is listed on the letter as the contact person. Roach is best known for his work as a staffer on the Senate Permanent Subcommittee on Investigations where he drove major probes into the subprime-mortgage meltdown that focused on Goldman Sachs, Deutsche Bank and other firms.
Roach didn’t return a call for comment; a spokesman for Brown declined to comment.
The banks are also concerned that the investigation is being conducted by the Democratic minority. Committee Chairman Richard Shelby, an Alabama Republican, didn’t sign the letters. While the Democrats can inquire about whatever they want, they can’t issue subpoenas without the Republican majority.
A spokeswoman for Shelby said the letters were not sanctioned by the committee.
Since the financial crisis, the world’s largest banks have paid billions of dollars to settle broad probes into market manipulation, money laundering and violations of international sanctions.
Earlier this year, for example, JPMorgan, Barclays Plc, and Royal Bank of Scotland Group Plc were among firms that pleaded guilty to manipulating currency markets. Those cases followed an investigation into interest-rate rigging that has already led to settlements with a number of banks.