December 08, 2022

Senators Warren and Smith Applaud Labor Department’s Proposed QPAM Rule to Curb Special Favors for Big Banks

DOL’s Employee Benefit Security Administration is Closing Loopholes in Rules Determining Which Financial Institutions Are Entitled to Manage Workers’ Retirement Savings “A QPAM status is intended to hold banks to high standards of integrity, yet the agency’s routine granting of exemptions for large financial institutions completely undermines the safety and purpose of the entire regime.”

Text of Letter (PDF)

Washington, D.C. — United States Senators Elizabeth Warren (D-Mass.) and Tina Smith (D-Minn.) sent a letter to the Department of Labor’s (DOL) Employee Benefits Security Administration (EBSA) in support of their new proposed amendments to the Qualified Professional Asset Manager (QPAM) Exemption, which would close loopholes that have allowed financial institutions with long records of criminal misconduct to continue managing workers’ retirements savings.

“We have long been concerned that EBSA’s use of individual exemptions has undermined the Department of Labor’s (DOL) responsibility to protect American workers and their retirement savings from greed, corruption, and mismanagement,” wrote the lawmakers.” DOL now has an opportunity to hold corporate wrongdoers accountable for their criminal misdeeds and prevent them from conducting business as usual at the expense of American retirees.”

To protect retirement assets, DOL is supposed to revoke QPAM status for institutions that are found guilty of criminal misconduct, barring them from being allowed to manage workers’ retirement funds. But DOL has granted exemptions to this rule and allowed financial institutions to retain QPAM status in virtually every relevant case, even when banks and other financial institutions – such as Credit Suisse Group AG, Goldman Sachs, Deutsche Bank AG, Citigroup Inc., and JPMorgan Chase  – have blatantly and repeatedly broken the laws.

“These banks have committed serious crimes that raise questions about their ability to manage retiree’s assets safely and soundly,” wrote the lawmakers. “DOL has failed to hold these institutions accountable for their criminal actions.”

The proposed amendments could strengthen QPAM requirements by clarifying and expanding the types of misconduct that make a QPAM ineligible, including specifically adding foreign criminal convictions to those types of misconduct, allowing DOL to impose these restrictions where it previously could not or would not.

“We encourage you to finalize these amendments to close these loopholes and end the practices by which financial institutions that were convicted of or plead guilty to fraudulent schemes continue to enjoy QPAM statuses,” concluded the lawmakers

Senator Warren has long fought to hold giant corporations accountable for criminal, corporate misconduct at the expense of the American consumer.

  • In February 2022, Senators Warren and Tina Smith (D-Minn.) sent a letter to Ali Khawar, the Acting Assistant Secretary at the Employee Benefits Security Administration (EBSA) in the Department of Labor (DOL), raising concerns about EBSA’s proposal to grant a one-year Qualified Professional Asset Manager (QPAM) exemption to Credit Suisse Group AG despite the bank’s impending conviction in an October 2021 judgment for “defrauding U.S. and international investors in the financing of an $850 million loan for a tuna fishing project in Mozambique” and its previous 2014 conviction for “conspiracy to aid and assist U.S. taxpayers in filing false income tax returns and other documents with the Internal Revenue Service (IRS).”
  • In April 2021, Senators Warren and Smith sent a letter to Deputy Assistant Secretary Timothy Hauser of the Employee Benefits Security Administration (EBSA) at the Department of Labor (DOL) opposing regulatory favors under consideration that would allow Goldman Sachs Group Inc.  to evade the full consequences of its impending admission of criminal wrongdoing for its subsidiary's role in the Malaysian 1MDB global bribery scandal.
  • In April 2019, Senator Warren introduced the Corporate Executive Accountability Act, which would hold executives of large corporations criminally responsible when their companies commit crimes, harm large numbers of Americans through civil violations, or repeatedly violate federal law.