In a letter sent to Sen. Elizabeth Warren (D-MA) obtained by ThinkProgress, Securities and Exchange Commission (SEC) Chair Mary Jo White said that she is “actively reviewing” the commission’s settlement policy with banks.
In May, Warren sent a letter to the Securities and Exchange Commission, the Justice Department, and the Federal Reserve questioning the willingness to pursue settlements over prosecutions and not requiring that banks admit fault when they settle.
In her response, White says that she will review the no-fault policy:
I agree that it is essential for the investing public to know that wrongdoing will be detected, thoroughly investigated, and punished. [...]
…I believe that our current settlement policy achieves a very public measure of accountability while at the same time allowing us to more quickly return funds to harmed investors and get wrongdoers out of the industry while conserving resources to pursue the next fraud. That said, I am actively reviewing the scope of the Commission’s neither-admit-nor-deny settlement policy with the leadership of the Division of Enforcement to determine what, if any, changes may be warranted and whether the SEC is making full appropriate use of its leverage in the settlement process.
This statement mirrors one she made in May in a testimony before the House appropriations committee. Of the policy to let firms settle without admitting to wrongdoing, she said, “among the many things I am reviewing as the new chair, is that policy and protocol. I understand the desire for accountability.”
Warren is not the only Senator pushing for more bank accountability after the financial crisis. Sens. Sherrod Brown (D-OH) and Chuck Grassley (R-IA) have criticized the Justice Department for treating the banks as if they are “too big too jail.” Grassley also accused regulators of giving banks a “get out of jail free card.”
Prosecutions for financial fraud hit a 20-year low in 2011. Meanwhile, regulators have mostly relied on settlements with big banks, many of which have allowed them to avoid admitting to wrongdoing. The largest settlements, for mortgage and foreclosure fraud, have experienced significant problems that have allowed banks to avoid many requirements and offered little aid to homeowners.