‘Populist Thirst’ Is Outing More Bad Bankers, Citi Lawyer Says
(Bloomberg) -- Regulators are increasingly penalizing individual bankers when investigating misconduct at their firms, according to senior lawyers at Citigroup Inc. and the Federal Reserve.
“There is a populist thirst worldwide to hold individuals accountable when there’s a problem,” Mei Lin Kwan-Gett, Citigroup’s deputy general counsel, told an audience Wednesday at the Clearing House and Bank Policy Institute’s annual conference in New York. “We are seeing, both within the U.S. and globally, regulators who typically focused just on corporations or entities really taking care to also name individuals.”
Federal courts questioned a number of settlements that big banks reached with U.S. authorities in the years after the financial crisis, pressing investigators to explain how they could extract large penalties from firms without identifying or charging employees allegedly involved. Critics of the practice argued that such fines are ultimately borne by shareholders.
The motive in naming bankers is deterrence -- a “high priority” for regulators, said Richard Ashton, deputy general counsel at the Fed. “We probably have done more individual actions in the last year than in recent memory.”
Facing that pressure, the industry is hoping regulators might provide more guidance on how they decide when to name people, Citigroup’s attorney said.
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