Senator Warren to Federal Reserve, DOJ, SEC: Have You Researched Costs to the Public of Settlement without Admission of Guilt?
WASHINGTON, DC - Following up on an exchange with Comptroller Thomas J. Curry, United States Senator Elizabeth Warren today sent a letter to Chairman of the Federal Reserve Ben Bernanke, Attorney General Eric Holder, and Chairman of the Securities & Exchange Commission Mary Jo White to request the disclosure of any research and analysis done on the costs to the public of settling an enforcement action without requiring an admission of guilt.
Following a February 14, 2013 Banking Committee hearing on Dodd-Frank implementation, Senator Warren asked Comptroller Curry, in a question for the record, whether the OCC has done any research or analysis on the trade-offs of settlement without admission of guilt. Last week, Comptroller Curry responded that the OCC has conducted no such research and analysis.
In the letter, Senator Warren asks the three additional regulators: "Have you conducted any internal research or analysis on trade-offs to the public between settling an enforcement action without admission of guilt and going forward with litigation as necessary to obtain such admission and, if so, can you provide that analysis to my office?"
Senator Warren also presses the importance of strong regulatory enforcement to make sure big banks follow the law. She argues 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 much more favorable to the wrongdoer.
"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."
To view the full text of the letter, please click here.
Senator Warren's questioning of regulators about the toughness of their enforcement actions at the Feb. 14 hearing received wide attention and has been viewed more than 1.2 million times on YouTube.