On Thursday, Senator Elizabeth Warren (D-MA) asked bank regulators why Wall Street has become a “no prosecution zone.” Everyone who is unhappy that no banker is behind bars for wrecking the economy is saying it is about time someone started asking questions.
Republicans blocked Elizabeth Warren’s appointment to head up the new Consumer Financial Protection Bureau before the president could make it, so she ran for the Senate instead. She won and now Wall Street banks and the regulators who coddle them are experiencing their worst nightmare.
In her first hearing two weeks ago, Senator Warren asked each regulator when was the last time they prosecuted a banker. She was told they don’t prosecute bankers; they enter into settlements out of court. She resumed her inquiry Thursday.
Warren questions why bankers who launder drug money escape jail
No large bank has been prosecuted by federal authorities over mortgage and foreclosure fraud, rate-rigging scandals, and money laundering schemes. Senator Warren told regulators from multiple agencies during Thursday’s Senate Banking Committee hearing that prosecution is less likely for banks that jeopardize the integrity of the American economy than it is for common criminals
“If you’re caught with an ounce of cocaine, the chances are good you’re going to jail,” Elizabeth Warren said. “Evidently, if you launder nearly $1 billion for drug cartels and violate our international sanctions, your company pays a fine and you go home and sleep in your own bed at night.”
Regulators just slap wrists of big banks
Regulators have resorted to settlements with banks instead of prosecution and these often appear as slaps on the wrist compared to the banks’ abuses. Banks have already figured out multiple ways to game foreclosure and mortgage abuse settlements, which haven’t extended the help to homeowners that was promised (in part because states weren't required to pass money on to homeowners).
It gets worse! When regulators levy large financial penalties on law-breaking banks, those penalties are tax deductible allowing Wall Street to claim a tax break on the cost of its wrong doing. So taxpayers pick up the tab.
As Think Progress pointed out Warren demanded answers from regulators for lack of prosecution for money laundering by big banks:
“Now in December, HSBC admitted to money laundering; to laundering $881 million that we know of for Mexican and Colombian drug cartels. And also admitted to violating our sanctions for Iran, Libya, Cuba, Burma, the Sudan. And they didn't do it just one time. It wasn't like a mistake. They did it over and over and over again across a period of years. And they were caught doing it. Warned not to do it. And kept right on doing it. And evidently making profits doing it.
Now HSBC paid a fine, but no one individual went to trial. No individual was banned from banking. And there was no hearing to consider shutting down HSBC’s activities here in the United States. So what I’d like is, you’re the experts on money laundering. I’d like your opinion. What does it take? How many billions of dollars do you have to launder for drug lords and how many economic sanctions do you have to violate before someone will consider shutting down a financial institution like this? ”
Senator Jeff Merkley (D-OR), author of many of the new rules in the Dodd-Frank Wall Street Reform Act, questioned Attorney General Holder’s assertion that large banks were “too big” to prosecute and wondered if Wall Street had become a “prosecution-free zone.”
It is not likely that Warren and Merkley will shame regulators and the Justice Department into throwing the crooks in jail, but it makes us feel better knowing someone is trying to do something about it.
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