Warren Wants CEOs Held Criminally Liable for Bailout Violations
(Bloomberg) -- Senator Elizabeth Warren is calling on the Federal Reserve to hold corporate executives personally liable if they take bailout money intended to bolster credit markets and fail to meet all the certification requirements.
Executives should be subject “to civil and criminal penalties, including disgorgement, if they provide fraudulent or misleading information or misuse funds, and should be required to immediately repurchase their bonds for the full amount when eligibility criteria are breached,” Warren said in a letter to central bank officials.
Warren is likely to raise the issue when Fed Chairman Jerome Powell and U.S. Treasury Secretary Steven Mnuchin appear via video conference before the Senate Banking Committee on Tuesday morning.
Warren is also asking that corporate executives regularly re-certify that they meet the requirements for two of the Fed’s bond-buying emergency lending programs -- the Primary Market Corporate Credit Facility and Secondary Market Corporate Credit Facility.
Limitations on eligibility for the corporate credit lending facilities has been a key focus of a congressional watchdog panel that Warren pushed to have created to oversee the Fed and Treasury response to the coronavirus pandemic. Warren, who was chairwoman of a similar panel following the 2008 financial crisis, said that some companies were able to tap bailout money they were ineligible for and didn’t face any consequences.
“You must ensure that -- unlike in the wake of the 2008 financial crisis -- companies that rip off taxpayers and the executives that run them are not let off the hook with minimal fines, no criminal liability, and no requirements that they even admit guilt,” Warren said in the letter.
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