Holding Regulators Accountable

Press Release

Holding Regulators Accountable

At today's meeting of the Senate Banking Committee, Senator Warner asked top regulators from the Federal Reserve, Office of the Comptroller, FDIC, and the Office of Thrift Supervision why the federal government has not used existing regulatory law to block - or recover - the shocking bonuses we've seen at AIG and others in the troubled financial services industry.

Under the Federal Deposit Insurance Act -- which is enforced by all four of the regulatory agencies represented at today's hearing -- the federal government can act to block "unsafe or unsound" banking practices, breached their fiduciary responsibility, or "received financial or other benefits" that show "willful disregard" for the safety and soundness of the financial institution.

"It sure does seem that some of the actions that have taken place - and case-in-point AIG… it sure seems like this tool could be used or could be pushed because there sure has been a whole lot of activities that have led to the financial enrichment or unsound practices, at least in retrospect. Have you thought through this tool, have you investigated it … why not take a little risk and push the edge, particularly with the amount of abuse and the amount of public outrage that we see today?"

Senator Warner wasn't completely satisfied with the answers he received from the regulators, and said afterward that he will send a follow-up letter to all of the regulatory agencies urging them to make greater use of the tools in the Federal Deposit Insurance Act.

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