Where’s the deterrent for stopping big banks from breaking the law?
That was the question posed by Senator Elizabeth Warren (D-Mass.) Thursday at the Senate Banking Committee Hearing, referencing the whopping raise recently given to Jamie Dimon, CEO of JPMorgan, whose Board of Directors awarded him the pay hike after the company spent billions to settle claims with the federal government over illegal conduct.
«Right now, if financial institutions can just settle their claims out of court, and get a raise for settling them, then where’s the deterrent?» asked Warren.
«I think this raises questions about whether our enforcement strategy is working or whether it’s actually so bad that we’re making it more likely for big banks to break the law,» Senator Warren said.
«Does anyone on this panel seriously think that the government’s enforcement system for financial crimes is actually working in the sense of deterring future lawbreaking?» Warren asked.
U.S. Federal Reserve Governor Daniel Tarullo responded by saying that «we’ll have to see if the size of those fines acts as a deterrent,» adding, «We are concerned with the healthy capitalization of the firm.»
Warren noted that «the public has little confidence in regulators’ willingness to seek the kind of penalties that will actually deter future financial crimes.»
«Jamie Dimon himself said on CNBC a couple of weeks ago that JPMorgan could never afford a public trial,» she said. «He said, I’m quoting here, ‘Banks have a very tough time doing that. That would have been criminal for me to subject our company to.'»
This, Warren, said, should show regulators that if there’s even a slight chance that regulators will take banks to trial, it will can have an impact on banks’ behavior.
This article originally appeared in Common Dreams.