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Lawmakers Push for Review of Waiver Requests From Banks in Forex Probe

By John Letzing

Citing the “criminal behavior” of some of the world’s biggest banks, a group of Democratic lawmakers is asking the Obama administration to take a closer look at the lenders’ actions before granting waivers they are seeking.

The legislators want Secretary of Labor Thomas Perez to consider the seriousness of the crimes committed by global banks requesting waivers to continue functioning without significant business interruptions, after they agreed last month to enter guilty pleas

The request is the latest salvo from lawmakers concerned big banks aren’t being adequately punished by U.S. authorities.

In a letter sent Thursday, Democratic lawmakers including Rep. Maxine Waters of California and Sen. Elizabeth Warren (D., Mass.) called on the Department of Labor to hold public hearings to consider waiver applications from Barclays PLC, J.P. Morgan Chase & Co., Royal Bank of Scotland Group PLC and Citigroup Inc., all of which agreed to plead guilty to conspiring to manipulate foreign-exchange rates.

UBS AG agreed concurrently to plead guilty to manipulating benchmark interest rates including the London Interbank Offered Rate, or Libor. It will also require a waiver, and the lawmakers urged a public hearing on that request as well.

“Five megabanks will continue doing business as if no crimes were committed and, so far, suffer no collateral consequences,” the lawmakers wrote to Secretary Perez. “In determining whether to grant these waivers, we urge you to give due weight to the seriousness of their criminal behavior, their extensive recidivist history, and the need to protect our nation’s workers and retirees from these bad actors.”

The lawmakers said they were aware of the waiver requests from Barclays, J.P. Morgan, RBS and Citigroup.

UBS wasn’t charged as part of the foreign-exchange probe. However, the Swiss bank had been placed under investigation for manipulating exchange rates, and its conduct prompted the Justice Department to discard a previous agreement struck in 2012 that spared the bank from charges related to manipulating Libor.

In addition to their guilty pleas, the banks collectively agreed to pay a total of $5.6 billion.

Pressure from lawmakers including Rep. Waters prompted the Department of Labor to hold a hearing last January on whether to grant Swiss bank Credit Suisse Group AG a waiver enabling it to continue managing assets for retirement funds. Credit Suisse pleaded guilty last year to helping U.S. clients evade taxes with Swiss accounts.

The bank was awarded a temporary waiver by the Department of Labor, which is due to expire in November.

“Every day, we hear from our constituents and other members of the public an increasing frustration with the two-tiered system of justice that puts low-level offenders in jail while the rich and powerful on Wall Street buy their way out of trouble,” the lawmakers said in the letter sent Thursday.

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