10/23/2013 01:46 pm ET

Elizabeth Warren Presses Federal Agencies For Enforcement Records On Financial Crimes


WASHINGTON -- Sen. Elizabeth Warren (D-Mass.) on Wednesday pressed three financial regulatory agencies for information on their criminal enforcement records since the financial crisis. In a letter to the heads of the Federal Reserve, the Securities and Exchange Commission and the Office of the Comptroller of the Currency, Warren also highlighted the prosecutorial record of bailout watchdog SIGTARP -- noting that despite puny staff and budget numbers, the organization had secured dozens of convictions.

More than five years since Lehman Brothers collapsed, no top Wall Street executive has been criminally charged in connection to the 2008 financial crisis. Bank regulatory agencies have civil enforcement powers, but cannot prosecute criminal cases. They can, however, refer criminal cases to the Department of Justice, which traditionally grants significant deference to regulatory recommendations.

SIGTARP, the Special Inspector General for the Troubled Asset Relief Program (TARP), is tasked with making sure banks don't defraud the government by abusing TARP funds. The funds were meant to help stabilize the banking system during the financial crisis. Most wrongdoing under TARP has been concentrated among relatively small financial players so far. Former SIGTARP head Neil Barofsky has complained in the past about political interference from the Treasury Department over efforts to crack down on big bank abuse of the bailout program.

Warren noted that SIGTARP's enforcement budget peaked at $48 million in 2009, with maximum enforcement staffing of 164 in 2012. In contrast, she noted, the three bank regulators receive hundreds of millions of dollars a year, with enforcement staff in the thousands. The Fed has the largest enforcement staff, at 4,071 in 2012, on a budget of $1.1 billion.

Warren posed six questions to the heads of the Federal Reserve, Securities and Exchange Commission, and Office of the Comptroller of the Currency:

1.The number of individuals your agency has charged criminally, including the number of senior officials you have charged;

2.The number of criminal convictions your agency has obtained;

3.The number of prison sentences your agency has secured;

4.The number of individuals your agency has charged civilly, including the number of senior officers you have charged;

5.The number of individuals your agency has suspended or permanently banned from working in the financial industry or elsewhere; and

6.The total amount of funds your agency has obtained through civil judgment or orders of restitution.

Warren, whose election to the United States Senate in 2012 was fiercely opposed by the financial services industry, has used her position on the Senate Banking Committee to press regulators about their enforcement records. In a clip that went viral, she asked regulators when the last time was that they took a big bank to trial. She has repeatedly criticized the practice of settling with financial institutions versus taking them to court, arguing that it does not deter criminality in the nation's financial system.

JP Morgan Chase recently reached a settlement with the Department of Justice for $13 billion that ends civil probes, but does not make the bank immune from criminal prosecution, Bloomberg reported. Though the settlement is a record, it is likely tax deductible and is just a portion of the bank's record $21.3 billion in profits last year.

Big banks have spent $66 billion on legal fees related to the financial crisis, according to SNL Financial, but it is just a fraction of the $207 billion made in profits by the six largest banks over the past three and a half years.

In her letter, Warren also highlighted the enforcement record for SIGTARP, which was created as a watchdog agency in the same bill that authorized TARP. She noted that despite a small budget compared to the Fed, the OCC and SEC, and narrow jurisdiction, the agency has a strong record in bringing senior officers to trial and getting criminal convictions.

OCC did not immediately respond to a request for comment, and the SEC declined to comment. A Fed spokesman told HuffPost that the agency had received the letter and plans to respond.


Elizabeth Warren
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