Reed Introduces Legislation to Hold Corporate Executives Accountable for Fraudulent Actions

Washington, D.C. - October 5, 2017 (The Ponder News) -- In an effort to prevent fraudulent and negligent behavior at large financial institutions and hold senior executives accountable, U.S. Senator Jack Reed has introduced the Corporate Management Accountability Act, which asks publicly traded companies to disclose policies on whether senior executives or shareholders bear the costs of paying the company’s fines and penalties.

Reed is introducing the legislation in the wake of several notable instances of negligent behavior by financial institutions - including Wells Fargo’s exploitation of its customers by opening unauthorized accounts and Equifax’s endangering millions of consumers by compromising critical personal information - that continue to undermine public confidence in the financial marketplace.

“Senior executives, many of whom are eager to take credit for a company’s good news, must also take more responsibility for the bad news, especially if it is true that the buck stops with them,” said Senator Reed, a senior member of the Senate Banking Committee. “For example, the Financial Crisis Inquiry Commission concluded ‘the financial crisis reached cataclysmic proportions with the collapse of Lehman Brothers,’ and yet, according to the Congressional Research Service, not a single senior executive officer at Lehman Brothers at the federal level was charged, went to jail, or personally paid a federal fine or penalty for the damage caused at Lehman Brothers that rippled through our economy in 2008. Companies must do a better job of aligning executive incentives so that they are motivated to put their shareholders, and not themselves, first.”

According to Professor Peter J. Henning, who writes for the White Collar Watch column for the New York Times: “A problem in holding individuals accountable for misconduct in an organization is the disconnect between the actual decisions and those charged with overseeing the company, so that executives and corporate boards usually plead ignorance about an issue until it is too late.”

The Corporate Management Accountability Act is one attempt at helping to solve this problem by asking publicly traded companies to disclose whether they expect senior executives or shareholders to pay the cost of corporate fines or penalties.

In the wake of the Wells Fargo scandal, Senator Reed questioned former Wells Fargo CEO John Stumpf during a Banking Committee hearing and pushed for answers as to why the bank opened up millions of fake bank accounts for customers. In August, after it was revealed that as many as 570,000 Wells Fargo customers may have been charged premiums for unwanted auto insurance they did not need, he joined his fellow committee members (Ranking Member) Sherrod Brown, Elizabeth Warren, and others in leading the call for a public hearing to review consumer rights violations by Wells Fargo.

In September, after Equifax revealed that unauthorized parties had obtained sensitive information such as Social Security numbers, addresses, and driver’s license numbers for as many as 143 million people, Senator Reed led a bipartisan group of 37 senators asking the Securities & Exchange Commission (SEC), the Department of Justice (DOJ), and the Federal Trade Commission (FTC) to investigate the sale of nearly $2 million in Equifax securities held by high-level Equifax executives shortly after the company learned of the massive cybersecurity breach. According to the New York Times, Equifax “increased its estimate on the number of Americans whose personal information was potentially exposed to 145.5 million, some 2.5 million more than it had previously disclosed.”

Bill Introduced to Support Minority Owned Banks and Increase Access to Affordable Financial Services

Source: House Representative Gregory W. Meeks (D-NY, 5th)

Washington, D.C. - September 13, 2017 (The Ponder News) -- Representatives Gregory W. Meeks (D-NY), Joyce Beatty (D-OH), and Dwight Evans (D-PA), co-chairs of the Congressional Black Caucus’s Economic Development and Wealth Creation Task Force, introduced HR 3741, which would codify and enhance the Minority Bank Deposit Program (MBDP), which encourages federal agencies to utilize minority-owned banks and low-income credit unions as financial agents and depositories. MBDP was created in 1969 to help minority-owned banks obtain access to reliable and stable sources of funding to better provide loans within their local communities, many of which are underserved and lacking affordable financial services.

Although over 80 minority banks and low-income credit unions are certified to work with the federal government under the MBDP program, most of the certified institutions do not have an existing relationship with the federal government. The Congressional Black Caucus’s Task Force took on the challenge to reform MBDP after recent reports in the Wall Street Journal found that “the 2008 recession hit the black banking sector especially hard…black-owned banks could disappear entirely within the next eight to 12 years.”[1]

Congressman Gregory W. Meeks stated, “Limited access to affordable financial services is a persistent problem in my community, and many other underbanked communities around the US. Since the financial crisis, over 5,000 bank branches have closed their doors, leaving communities like mine with less safe and costlier financial services options. Our bill strengthens minority-owned banks, improves the financial health of the communities in which they serve, and provides more Americans with reliable and affordable banking options. I urge all of my colleagues to join us in this effort.”

“Since the 2008 Financial Crisis, the number of minority-owned and women-owned banks and credit unions have plummeted, leaving countless businesses and families in the surrounding communities with few, if any, financial options to start or grow their business—much less help to get a home or a car loan,” Congresswoman Beatty noted. “That is why it is critical that Congress pass legislation supporting the Minority Bank Deposit Program to ensure all American entrepreneurs and families have equal opportunity at achieving their American Dream.”

Making access to capital and credit a reality for all small business owners and entrepreneurs should be a reality for each and every individual in our neighborhoods. This is an issue too many individuals in our neighborhoods struggle with, specifically in our minority communities,” Congressman Dwight Evans said. “In our Commonwealth, the Pennsylvania MBDA Business Center has generated over $290 million contracts and financing, and created hundreds of jobs since 2004. The numbers don’t lie—they clearly demonstrate the viability of a model that creates jobs, spurs economic growth and facilitates community investment. I am pleased to join with my colleagues to introduce the Minority Banking Deposit Program, which reinforces, strengthens, and modernizes these critical financial institutions.