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August 15, 2019 By Richard Bowen

Too big to be held accountable?

Graphic with the word "Accountability" in all caps running across a circle with a line through it.

Well the jury’s in. And the results are not good.

It appears we are more lenient towards white-collar financial crimes than ever, with fewer financial crimes cited and lesser fines/settlements paid.

In our present administration, fines and settlements against corporations have plummeted and prosecutions of individuals are falling to record lows.

In the last administration the Department of Justice, albeit still too lenient on the financial institutions that had committed fraud, at least consistently required that the banks acknowledge their bad acts (although it was not a legal admission of guilt). That practice has now ceased.

Overall the message is: get a free ride, defraud the public and you’ll get your hands lightly slapped and that’s it. Certainly, a future ticket to ride.

As I have said many times, “there is no accountability in banking or in government.” I told World Finance there exists an “incestuous” revolving door relationship between Wall Street banks and their regulators. And the situation still prevails and in fact is worse than ever.

A recent case in point involves two U.K.-based banks, Barclays and Royal Bank of Scotland (RBS). According to Jesse Eisinger, writing in ProPublica, the Justice Department recently overruled staff prosecutors to reduce the settlements sought against the Royal Bank of Scotland and Barclay’s Bank.

In fact, for the Royal Bank of Scotland, charges that were to have been pursued as a criminal case are now being pursued as a much less serious civil one.

Both cases involved accusations that the banks misled buyers of residential mortgage-backed securities before the 2008 financial crisis which led to investor losses totaling $73 billion.

Even though the settlements are for far less, Sarah Sutton, a DOJ spokesperson claimed the Barclays and RBS settlements held the banks accountable for serious misconduct, and that the penalties recovered from the banks were fair and proportionate compared with those previously obtained from other banks.

Circle cluster graphic that shows civil penalties that banks committed to pay in mortgage settlements with the DOJ; commitments to compensate consumers in Obama-era settlements, which may not reflect actual outlays by the banks, are excluded.
Shows civil penalties that banks committed to pay in mortgage settlements with the DOJ; commitments to compensate consumers in Obama-era settlements, which may not reflect actual outlays by the banks, are excluded. Graphic used with permission from ProPublica.

According to Ms. Sutton, “they were largely negotiated by career attorneys in the Department and U.S. Attorneys’ offices with the support and collaboration of Department leadership.”

What’s the story here?

Both these banks, as have many others, are playing the revolving door game and have hired former high-level DOJ officials who are presently at prestigious DC law firms.

This conflict of interest is prevalent and lends itself to biased decisions.

As far back as 2016, Senator Elizabeth Warren called out the DOJ and then-Attorney General Eric Holder for ignoring 11 Congressional Commission Criminal referrals, including my own.

Black and white image of man holding a sign that says, "Too big to fail is too big to allow" in all capital letters.
Photo by Anuula via Flickr. (CC BY-SA 2.0)

Senator Warren stated, “It has been almost a decade since the subprime mortgage market began to collapse and the individuals and corporations responsible for the resulting financial crisis have still not been held responsible. It is not too late to do so; and I urge your office to act quickly to open an investigation into the process by which the DOJ handled FCIC referrals of corporate and individual misbehavior that harmed millions of Americans.”

Fast forward to 2019. Her pleas were ignored, the “behaviors” continue, and the administration does not hold wrongdoers accountable.

The fact remains, Wall Street got slapped on the wrist and no one has gone directly to jail! Extracting settlements paid by shareholders is not the same as holding the wrongdoers accountable. The Justice Department and the Securities and Exchange Commission, in spite of their promises to hold the TBTF accountable, have failed miserably. The evidence has certainly been there, as I can personally attest to.

The revolving door practice which prevails in government today is exacerbating the issues, not solving them.

There has been no accountability, and it looks as if there will be none soon. So, my question is, if we see there is little to no accountability, how many more corporations and financial institutions will take advantage of the present leniency?

WE’RE BACK! …The corporate debt bubble strikes again!
How to Lose or Gain Productivity and Profitability

Tagged With: accountability, Administration, Department of Justice, tbtf, Too Big to Fail, Wall Street

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Richard Bowen is widely known as the Citigroup whistleblower. As Business Chief Underwriter for Citigroup during the housing bubble financial crisis meltdown, he repeatedly warned Citi executive management and the board about fraudulent behavior within the organization. The company certified poor mortgages as quality mortgages and sold them to Fannie Mae, Freddie Mac and other investors.

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~ William D. Cohan, NY Times Best Selling Author
2017-06-30T10:08:59-05:00
"Richard Bowen is one of my heroes. His is a story of human fortitude at its best and Wall Street at its worst." ~ William D. Cohan, NY Times Best Selling Author
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"Richard's speech at the April Financial Executives International dinner was informative, interesting, riveting, and fast moving.  The feedback from members was overwhelming positive, and Richard received one of the few standing ovations given by our membership." ~ Jim Farrell, Program Chairman, Dallas Chapter, Financial Executives International
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Dennis McCuistion"Richard Bowen has been there, done that, and has the scars to prove it, and his message of corruption at the highest levels of industry and government needs to be heard. I only wish that more bankers had the courage that Bowen exhibits. He is not only one of the most talented bankers I have ever met, he has more integrity than all the bankers on Wall Street put together. If his former employer had listened to him taxpayers would not have had to bail out Citi for the third time in the last 30 years."

~ Dennis McCuistion, Host of the McCuistion TV program
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"Richard Bowen has been there, done that, and has the scars to prove it, and his message of corruption at the highest levels of industry and government needs to be heard. I only wish that more bankers had the courage that Bowen exhibits. He is not only one of the most talented bankers I have ever met, he has more integrity than all the bankers on Wall Street put together. If his former employer had listened to him taxpayers would not have had to bail out Citi for the third time in the last 30 years." ~ Dennis McCuistion, Host of the McCuistion TV program
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Presentation Topics

Playing for High Stakes: The Principles and Practice of Ethical Leadership

Dark Citi: The Story of a Whistleblower

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Now an ethical leadership speaker, Richard Bowen was Citigroup's Business Chief Underwriter during the housing bubble.

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