March 24, 2017

By Bob Coleman
Editor, Fraud Friday

Fraud Friday — SIGTARP Wants to Change Too Big to Jail Rules for Wall Street Bankers

The Special Inspector General investigated banks that took TARP funds during the recession touts her success of charging 88 community bankers with fraud, jailing 44.

And she promises more community banker indictments in her first quarter report, “We expect more bankers to be indicted and our highest priority is to obtaining those indictments where we have uncovered evidence of fraud. In other investigations of bankers, we are still obtaining evidence to determine whether there is evidence of fraud for referral to prosecutors.”

But what about the Wall Street bankers? SIGTARP admits they are too big to jail.

“SIGTARP does not have the law enforcement tools required to prove criminal intent of large bank CEOs, CFOs, COOs or CCOs as long as they continue to insulate themselves from knowledge of crime or fraud within their organization.”

The solution?

SIGTARP wants a law passed to require the C-Suite at the six largest Wall Street banks that took TARP bailout funds to sign an annual certification to law enforcement that they have conducted due diligence and can certify that there is no criminal conduct or civil fraud within their organization.

The six banks, who received more than $160 billion in TARP funds, are Bank of America, Wells Fargo, Citigroup, Goldman Sachs, Morgan Stanley, and JP Morgan.

“An annual certification requirement provides an incentive to CEOs, CFOs, COOs and CCOs to look for crime and fraud within their organization so that they can stop it. In other words, to give them an incentive to be ‘in the know’ about crime or civil fraud within their company (particularly major fraud in the way the company does business), rather than stay ‘in the dark.’ This is something that these CEOs, CFOs, COOs and CCOs should already be doing. The incentive for a CEO to be ‘in the know’ about crime in his or her bank already exist naturally for CEOs of mid-sized and smaller banks because that crime can take down the bank. Changing incentives for leaders of the top six Wall Street banks that took TARP funds could change culture to one of increased accountability.”