WASHINGTON—Massachusetts Senator Elizabeth Warren continued pressuring banking regulators Thursday, criticizing them during a Senate hearing for failing to enforce tougher penalties on the nation’s largest banks.
Warren joined other members of the Senate Banking Committee in grilling regulators on corporate wrongdoing, focusing on the punishment faced by British bank HSBC after it was caught laundering Mexican drug money. Federal regulators fined the company nearly $2 billion in December. But Warren chided them for neither forcing the bank to shut down its US operations nor prosecuting individual employees.
“If you’re caught with an ounce of cocaine, the chances are good you go to jail,” Warren said. “But evidently, if you launder nearly a $1 billion for drug cartels and violate our international sanctions, your company pays a fine and you go home and sleep in your own bed at night...I think that’s fundamentally wrong.”
Representatives from the Treasury Department, Federal Reserve and Office of the Comptroller were unclear as to if and when they would stiffen penalties for such malfeasance. They agreed, however, that regulators must follow the Justice Department’s lead when it comes to prosecutions.
The response puts the Obama Administration in a tight spot regarding financial regulation, as it came a day after Attorney General Eric Holder told the Senate Judiciary Committee that the nation’s banks had become too big to jail.
“The size of some of these institutions becomes so large that it does become difficult for us to prosecute them,” Holder said at a hearing Wednesday. “If we do prosecute—if we do bring a criminal charges—it will have a negative impact on the national economy, perhaps even the world economy.”