US politicians could look to use the FX fines issued to the banks last week for their own political purposes, with Senator Elizabeth Warren already being outspoken on this topic.
Specifically, Warren has voiced concerns over the waivers granted to the banks that pleaded guilty to FX malpractice as part of their settlement deals.
Warren is reportedly calling for US Department of Labor hearings on whether banks accused of rigging foreign exchange markets should be allowed to manage retirement accounts, according to certain news outlets.
"When banks plead guilty to a crime, federal agencies must do more than look the other way," Warren told the Financial Times. "The SEC has already granted waivers to each of these banks without any detailed explanation, but it is not too late for the Department of Labor to hold a public hearing before it decides that such brazen lawbreakers can be trusted managing workers' retirement accounts."
As part of the banks’ settlement deals with the US authorities, the Securities and Exchange Commission (SEC) provided them with waivers that will mean that they don’t have to suspend any of their banking services, despite pleasing guilty to conducting illegal activity in the FX markets.
Profit & Loss previously reported that SEC Commissioner Kara Stein had dissented from the decision to award the waivers, issuing a strongly worded statement in which she argued that such waivers are removing the most serious consequences of illegal activity for these institutions.
“She issued a blistering dissent and so it will be interesting to see how Chair [Jo} White or the SEC more broadly responds. Generally the waivers are just issued, there’s no news around it, but with Commissioner Stein dissenting the issuing of these waivers has become a new story in and of itself,” says one source in Washington.
Asked whether the fines issued to the banks will be used by politicians in the build-up to the US presidential election in November 2016, the source indicates that this is already the case.
“Senator Elizabeth Warren has been quite vocal and quite effective about holding the Obama administration accountable and I think the DoJ is under increased pressure to show that it can pursue and prosecute as appropriate. I think the closer we get to November 2016 and the more things become “silly season” then people’s political motives will probably become a little bit more apparent,” the source adds.
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