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?