Summary: Senators criticized the Department of Justice and banking regulatory agencies for failing to take stern action against bankers whose actions contributed to the financial crisis.
According to the Wall Street Journal, Senator Elizabeth Warren took the lead as legislators criticized government agencies and the Federal Reserve for failing to hold certain persons accountable for behavior that led to the United States’ financial crisis, although settlements were reached with some of the country’s biggest banks over mortgage wrongdoings.
Federal Governor Daniel Tarullo, the central bank’s regulatory point man, proposed that the Federal Bank ban persons at large banks from ever working in the industry again. He noted that the Federal Reserve was investigating, but did not expand on the investigations.
Senator Warren felt this was not enough to punish those responsible for the downturn of the economy. “You are supposed to refer cases to the Justice Department when you think individuals should be prosecuted. Without criminal prosecutions, the message for every Wall Street banker is loud and clear. If you break the law, you are not going to jail but you might end up with a much bigger paycheck.” Warren also pointed out that hundreds of individuals had been prosecuted after a loans and savings crisis that occurred in the 1980s.
Although Senator Richard Shelby and Warren do not normally see eye to eye on political topics (Warren is a Democrat, whereas Shelby is a Republican), he stated that he agreed with Warren’s anger over the lax punishment for bankers. He directed his blame at the U.S. Justice Department, since banking regulatory agencies are unable to bring criminal charges against executives.
Mr. Shelby stated that no one in the financial industry should be “able to buy their way out from culpability when it’s so strong it defies rationality—I agree with [Warren] on that. Ultimately, it seems like the Justice Department seems bent on money rather than justice and that’s a mistake.”
Several settlements have been reached with banks stemming from their actions during the financial crisis. J.P. Morgan Chase & Co. settled for $13 billion, Citigroup settled claims for $7 billion, and Bank of America Corp. settled for a whopping $16.65 billion.
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