Anti-Wall Street senator lambasts bank non-prosecution deals

Elizabeth Warren, the anti-Wall Street senator, has lashed out at US regulators for being soft on misbehaving banks, describing settlements that extracted billion dollar fines as a "slap on the wrist" and demanding that banks be put on trial.

The remarks by Ms Warren, who has emerged as a standard bearer of the Democratic left, are designed to put pressure on the US authorities as they come close to concluding their investigation into the manipulation of the foreign exchange market.

They are also likely to feed into the 2016 presidential election campaign. Although Ms Warren has criticised regulators as weak before, her timing suggests a renewed effort to pull Democrats to the left on Wall Street reform as the party waits to see what position Hillary Clinton will take on the matter.

Although the Department of Justice has helped to secure more than $100bn in fines from banks as part of settlements over wrongdoing since the financial crisis, Ms Warren said the deals - known as deferred or non-prosecution agreements - were insufficient and being misused.

"Today, the Department of Justice doesn't take big financial institutions to trial - ever - even when financial institutions engage in blatantly criminal activity," Ms Warren said according to prepared remarks.

She said that some banks had broken the law again despite having signed agreements vowing to improve their behaviour, and called on the authorities to stop allowing banks to enter into a second deferred prosecution agreement if they are already operating under a first.

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"It's time to stop recidivism in financial crimes and to end the 'slap on the wrist' culture that exists at the Justice Department and the SEC."

In a letter to shareholders last week, Jamie Dimon, chief executive of JPMorgan Chase, complained that banks were frequently paying penalties to five or six different regulators on exactly the same issue.

"This is an unprecedented approach that probably warrants a serious policy discussion - especially if those regulators (as at least some of them have acknowledged) don't take into account what is being paid to the others," he wrote.

On Tuesday, Leslie Caldwell, a senior justice department official, reiterated that the DoJ would not hesitate to tear up a deferred prosecution or non-prosecution agreements when such action is appropriate.

Some of the banks that have DPAs for past wrongdoing are in danger of having those deals scrapped as part of the investigation into the manipulation of foreign exchange markets.

But Ms Caldwell, assistant attorney-general, also noted that sometimes, a DPA or NPA can accomplish as much or even more than a criminal conviction.

"We can require remedial measures and improved compliance policies and practices," she said in a speech at New York University. "We also can require companies to co-operate in ongoing investigations, including investigations of responsible individuals."

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