Senate’s Warren Seeks Disclosure Over Firms’ Wrongdoing
U.S. government agencies would have to provide “accessible and detailed” disclosure of settlements over corporate wrongdoing under a bill proposed by Senators Elizabeth Warren and Tom Coburn today.
“Anytime an agency decides that an enforcement action is needed, but it is not willing to go to court, that agency should be willing to disclose the key terms and conditions,” Warren said in a statement. “Increased transparency will shut down back-room deal-making and ensure that Congress, citizens and watchdog groups can hold regulatory agencies accountable for strong and effective enforcement.”
Warren, a Massachusetts Democrat, and Coburn, an Oklahoma Republican, announced their proposal a day after JPMorgan Chase & Co. (JPM) agreed to pay $2.6 billion to resolve criminal and civil allegations related to the bank’s dealings with Bernard Madoff, the New York money manager convicted for running a Ponzi scheme.
Under the lawmakers’ Truth in Settlements Act, all public statements referencing dollar amounts would have to include explanations of how those agreements are categorized for tax purposes and whether payments may be offset by “credits.” The bill would have to gain approval by the full Senate and the Republican-controlled House before it could go to President Barack Obama to be signed into law.
“Since agencies are not currently required to disclose the financial structure of government settlements, too often the true value of those settlements is not known,” Coburn said in the statement. “Our bill gives taxpayers the transparency tools they need to access real information and numbers.”
Warren said she does not anticipate a partisan divide on this issue.
“This is one that we should be able to attract people on both sides of the aisle,” Warren said in a conference call. “Anyone who agrees on government accountability should support this bill.”
Deferred-prosecution agreements like the one JPMorgan agreed to yesterday have in recent years become a common tool for the Justice Department to resolve criminal investigations against large banks.
From 2000 to 2005, the Justice Department entered into 35 corporate deferred-prosecution and non-prosecution agreements, according to data compiled by law firm Gibson Dunn & Crutcher LLP. Since 2006, the department has struck 222 such deals, according to the firm.
The Securities and Exchange Commission has begun insisting on firms acknowledging guilt rather than allowing them to settle without admitting or denying wrongdoing, an idea that has been pushed by Warren since she took office last year.
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