Lone SEC dissenter objects to letting banks off the hook

We break from the usual to highlight a lady with brass: Kara M. Stein, appointed to the Securities and Exchange Commission in August 2013.

Last week, she refused to let the banks off the hook.

Stein broke from her fellow commissioners and dissented on a key vote: whether to grant five large Wall Street banks "waivers" from punishment for the crimes the banks have committed in the foreign-exchange market.

Yes, waivers.

The gang of five are UBS, Barclays, Citigroup, JPMorgan Chase, and Royal Bank of Scotland. All five agreed last week to plead guilty to rigging foreign-currency rates and pay fines totaling nearly $5.7 billion.

These institutions have committed so many crimes, the SEC has granted Barclays its third waiver since 2007; UBS, its seventh since 2008; JPMorgan, its sixth since 2008; RBS, its third since 2013; and Citigroup, its fourth since 2006.

Banks receive waivers so they can continue doing business in the U.S., which should be a privilege and not a right. Where are the waivers for retail investors who commit crimes?

Stein said the latest foreign-exchange scandal comes on top of the London Interbank Offered Rate (LIBOR) interest-rate scandal, on top of the mortgage scandal.

It's all "the same behavior: a criminal conspiracy to manipulate," she wrote in her dissent.

In the euro/dollar currency markets, traders conspired almost daily in an exclusive online chat room they referred to as "The Cartel" or "The Mafia." Bank salespeople lied to customers to collect markups.

"This criminal behavior went on for years, unchecked and undeterred," Stein wrote.

"It is troubling enough to consistently grant waivers for criminal misconduct. . . . This type of recidivism and repeated criminal misconduct should lead to revocations of prior waivers, not the granting of a whole new set of waivers. We have the tools, and with the tools the responsibility, to empower those at the top of these institutions to create meaningful cultural shifts, yet we refuse to use them."

Amen.

Stein joined the SEC after serving as legal counsel to Sen. Jack Reed (D., R.I.). She helped draft the hotly disputed Dodd-Frank Wall Street Reform and Consumer Protection Act.

You can read her dissent online at the SEC website: http://www.sec.gov/news/statement/stein-waivers-granted-dissenting-statement.html.

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@erinarvedlund