Attestation Update – A&A for CPAs

Technical stuff for CPAs providing attestation services

On the other hand, you cannot say banks are underregulated

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Cooking Libor. Money laundering. What are the big banks doing?

Where are the regulators?

I’ve been scratching my head about some of the things banks have been doing lately, such as manipulating Libor. Other people have long been blaming banks and other financiers as the primary cause of the 2008 financial crisis. I am definitely not in that camp, but that’s a topic for another day and a dozen posts. HSBC is setting a $1.5 billion reserve for possible fines related to money laundering, since they apparently allowed $7 billion to move from Mexico to the US in violation of US law.

In the midst of that head scratching, many people are wondering, where were the regulators? In the Libor issue at least, they were well aware of what was going on.

So is there a lack of regulation or lack of regulators? Not a chance.

Take a look at the list of agencies, just in the United States, that regulate, investigate, and prosecute banks, as listed in America’s financial system-Law and Disorder from The Economist:

Securities and Exchange Commission

Commodity Futures Trading Commission (CFTC)

Office of the Comptroller of the Currency

Federal Deposit Insurance Corporation

Department of Justice

Office of Foreign Assets Control

Financial Crimes Enforcement Network

Federal Reserve – under the Dodd-Frank act

Consumer Financial Protection Bureau

Federal Housing Finance Agency

Department of Housing and Urban Development

Federal Trade Commission … litigation concerning the servicing of loans

Department of Labor – pensions

And there are

parallel departments in state governments

So, no, there is certainly not a lack of regulators watching the banks. It isn’t as if there isn’t a large enough volume of rules and regulations either.  Most of the above agencies each have their own set of regs that banks are required to follow.

And then there are the private attorneys:

And behind them, of course, are private armies of lawyers, ready to march wherever there is money. During fiscal year 2011 the SEC collected $414m in fines from large financial institutions in America, according to NERA, an economic consultancy; settlements in class-action lawsuits reached $1.5 billion during the 2011 calendar year.

I’m still scratching my head trying to figure out what is going on. I don’t have any answers, let alone good ones. Saying there aren’t enough regulations isn’t an answer though.

Written by Jim Ulvog

November 7, 2012, 6:15 am at 6:15 am

Posted in Pondering

Tagged with ,

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