In the letter to the Justice Department, the senators wrote: “A bank teller that takes a handful of bills from the cash drawer is likely to face charges for theft and prison time. She can’t hide behind an army of lawyers and corporate policies that diffuse accountability for those at the top. Meanwhile, an executive who oversees a massive fraud that implicates thousands of bank employees and costs customers millions of dollars can walk away with a hefty retirement package and millions in the bank.”
The senators went on to say that, each time the Justice Department settles a case of corporate fraud without holding individuals accountable, it “reinforces the notion that the wealthy and powerful have purchased a higher class of justice for themselves.”
The letter was signed by Senators Tammy Baldwin (D-WI), Richard Blumenthal (D-CT), Richard Durbin (D-IL), Al Franken (D-MN), Kirsten Gillibrand (D-NY), Angus King (I-ME), Amy Klobuchar (D-MN), Patrick Leahy (D-VT), Ed Markey (D-MA), Jeff Merkley (D-OR), Bernard Sanders (I-VT), Elizabeth Warren (D-MA) and Ron Wyden (D-OR).
Meanwhile, Congresswoman Maxine Waters (D-CA), ranking member of the Committee on Financial Services, and 10 committee Democrats issued their own letter to financial regulators, urging them to strengthen a proposed “clawback” rule regarding when a financial institution must revoke senior executives’ bonuses.
In their letter, the members underscored the need to strengthen rules regarding incentive-based compensation at financial institutions, as required by the Dodd-Frank Act. The senators expressed particular concern with the “excessive level of discretion” granted to firms in executing clawbacks for misconduct, fraud or misrepresentation in a proposed rule issued in May by the Federal Reserve, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, National Credit Union Administration, Federal Housing Finance Agency and Securities and Exchange Commission.
“We do not believe that strong public policy goals are served by giving large banks and other financial institutions the choice as to whether to clawback executive bonuses in the face of widespread misconduct, such as the opening of more than 2 million unauthorized deposit and credit accounts,” the letter stated. “Given the reluctance of many boards of directors to punish peer-group members within the senior executive class, we believe that your agencies should require clawbacks in these instances.”