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Bank regulators under fire in DC

By David McMillin ·
Wednesday, February 20, 2013
Posted: 9 am ET

Are banking regulators really that tough?

That's the question that Sen. Elizabeth Warren, D-Mass., posed to U.S. Comptroller of the Currency Thomas Curry, Securities and Exchange Commission Chairwoman Elisse Walter, Federal Deposit Insurance Commission Chairman Martin Gruenberg and a number of other regulatory leaders in a Senate Banking Committee hearing on Capitol Hill last week. None of them had much of an answer for her.

While each of the leaders plays a crucial role in supervising the activities of the banking industry, supervising seems to mean settling. Some of the regulators pointed to the ability to get financial settlements from Wall Street banks rather than taking them to a courtroom. Others, when asked of the last time they took a Wall Street bank to trial, didn't respond at all.

Warren highlighted that prosecutors around the country go after citizens who break the law very aggressively. However, regulators seem to lack that same approach when it comes to banks.

"There are district attorneys and U.S. attorneys who are out there every day, squeezing ordinary citizens on sometimes very thin grounds, and taking them to trial in order to make an example," Warren said. "I'm really concerned that 'too big to fail' has become 'too big for trial.'"

Warren isn't the only one concerned that the banking industry has been able to elude prosecution. While institutions have forked over plenty of money over the past few years for their role in the mortgage crisis, executives have not been forced to pay with their personal time.

What do you think? Are banks threatened by the potential for legal action from regulators? Or, do the nation's financial institutions simply expect to pay settlements and fines for any criminal behavior?

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February 21, 2013 at 1:51 pm

Fact is, I am suing the whole bunch of them: from Loan Originator, to Servicers, to Lender, to Trustees and all 3 Foreclosure Mills, as well as suing each individual personally who played a role in the 3 illegal foreclosures on my one primary residence. So I waited for the Attorney General Settlement, and now I ask for what? While telling servicers and foreclosure mills what they were doing was illegal, they kept putting my home on the accelerated foreclosure fast track. Personal liability coverage will not help some of them by knowingly committing fraud. I am prosecuting Pro Se for both Criminal and Civil damages. The Loan Officer and the Bank Branch Manager were secret LLC partners in a jacked up 3rd by "Local Investers." My credit score was 802, and I kept asking the Loan Officer: why a 30 year, 6% fixed interest could not be done. I had the 10%, $75k down in cash. So now I know the rest of the story, and they should go to jail! My new mission and goal in life!

ken barr
February 20, 2013 at 8:29 pm

Banks and corporations appear to establish a pool of funds to pay fines for violations of law. The perpetrators of the violations are well aware they will not be held responsible.

February 20, 2013 at 12:47 pm

This shouldn't even be a question. Regulators should absolutely take a few of these CEO's and their minions to trial!!

Geraldine Leekthomas
February 20, 2013 at 12:24 pm

Thank you Mrs. Warren for asking the right question, now it's time for the regulators to do their jobs and take the those banker to trial and have penalties imposed accordingly. If I broke a traffic law court & jines are enacted, after several infractions jail time is set. The banks never stop their criminal behavior and nothing happens. They are not too big for trial, the regulators are TOO DUMB TO PURSUE TRIAL.

Tom Hammerton
February 20, 2013 at 11:54 am

There are many influences at play. The government regulators appear timid and probably lack both the experience,authority and funds to attempt a clean up of the financial system. Not to mention the banking lobby working against them. Mr. Dray makes a good point regarding the fines levied against the banks. However, in a perfectly ethical and fair world, would one still trust corporations/banks/individuals not to do indulge in the same behavior. Outrageous? yes. Not convinced the government really wants to pursue this mission, but it makes good press.

February 20, 2013 at 11:43 am

The banking industry, along with the petroleum, pharmaceutical and other such "Too big to fail" entities, OWN the United States congress. "Too big to fail" obviously means "Too big to jail". If any of we "Regular" people tried to do to a bank what the banks do to us, we would need a mask and a gun, and we'd go to jail for a very long time. Someone needs to define "Regulate" to these regulators. We should also remember that the first syllable in the word "Congress" is "CON".

Joe Dray
February 20, 2013 at 11:17 am

The regulators are not aggressive enough. Banks and large finincial institutions take it for granted that fines are the worst they will suffer for misbehovior. The executives need to be held accountable for illegal activity. Part of the problem is that many regulators move in and out of the banking industry, and compromise their integrity by working for the same industry they used to regulate. The current situation is outrageous.