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Deputy U.S. attorney general finds banks' compliance lacking

James Cole claims recent statements are “simply too little, too late”

JPMorgan Chase has begun to beef up its risk and compliance efforts with an additional $4 billion and 5,000 extra workers assigned to the division. Bank of America has set aside more than $5 billion for legal purposes. Risk and compliance officers are getting hired at their highest rates in years.

But are banks truly doing enough to comply with federal regulation standards? According to the deputy U.S. attorney general, the answer is no.

Deputy Attorney General James Cole spoke out against banks at a conference at Washington D.C. on Nov. 19. He says that the banks are not yet up to the government’s standards, citing recent investigations into Bank of America, Wells Fargo, Morgan Stanley and others as proof.

“Companies regularly argue during negotiations that they have taken various steps to set the right tone at the highest levels of their institutions,” Cole said, according to The Wall Street Journal. “But based on what we have seen, we cannot help but feel that the message is not getting through often enough or clearly enough.”

In response to recent settlements and statements from the banks that they were complying, Cole claimed they were “simply too little and too late.” He said the Department of Justice has looked at everything related to a bank’s culture when deciding penalties, meaning a whole host of evidence is taken into account to determine whether a bank is truly compliant.

“We look at chats, emails and recorded phone calls, things that are readily available to senior management and compliance professionals,” he said. “We talk to witnesses in order to determine what kinds of messages about compliance have been conveyed or on the flip side of that coin what encouragement they may have received to exploit any possible edge to make money.”


For more on America’s big banks and their legal troubles, check out these InsideCounsel stories:

N.Y. court set to decide on BofA $8.5 billion settlement

JPMorgan cuts deal with investors over mortgage-backed securities

Clinton recommends creative uses for bank fines

U.S. government seeks $863.6M following BofA fraud ruling

Wells Fargo could be next bank to face suit under FIRREA

Assistant Editor

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Zach Warren

Zach Warren is Assistant Editor of InsideCounsel magazine, where he oversees online content submissions and administers InsideCounsel's enewsletters. Zach specializes in new media and multimedia...

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