Thursday, July 30, 2015

Top Fed officials consider enforcement issue at closed meeting

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WASHINGTON - The U.S. Federal Reserve's Board of Governors took the unusual step of considering an enforcement issue on Thursday, less than two months after Chair Janet Yellen pledged that top officials would have more direct involvement in such decisions.

The Fed, which has enforcement authority over bank holding companies and foreign bank operations in the United States, said on its website that a closed board meeting on Thursday included discussion of an "enforcement matter."

The Fed did not disclose any details, and a Fed spokesman declined to comment further.

U.S. lawmakers have criticized top Fed officials' tendency to defer to staff on enforcement matters. The last time the Fed board took up a supervisory enforcement issue at a closed meeting was in November 2010, according to the Fed's meeting notices.

Yellen told a Senate panel in February that the board should be more involved in "important decisions."

Senator Elizabeth Warren and Representative Elijah Cummings, both Democrats, sent a letter to Yellen recently that said internal data showed the Fed board only voted on 11 of about 1,000 enforcement actions taken over the last 10 years.

Warren and Cummings have been particularly frustrated that top Fed officials did not scrutinize a settlement with big banks over home foreclosure abuses committed after the housing crash of the 2007-2009 financial crisis. The lawmakers thought the settlement was too lenient on the banks.

Some regulatory agencies, such as the U.S. Securities and Exchange Commission, require top officials to approve all enforcement actions.

In the last year, the Fed, along with other regulators, fined JPMorgan Chase over trading losses in London and Royal Bank of Scotland over sanctions violations.

Reuters
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