Tags: federal reserve | tarullo | wall street | misconduct

Fed's Tarullo: Wall Street Misconduct 'Disturbingly' Regular

Monday, 20 October 2014 12:46 PM

Federal Reserve Governor Daniel Tarullo said cases of misconduct among banks have continued with “disturbing regularity” even as their financial positions have strengthened.

“For a time, these stories were the legacy of pre-crisis errors and misdeeds, with a focus on the mortgages and mortgage-related products that lay at the heart of the crisis,” Tarullo said in the prepared text of remarks delivered at a workshop on reforming culture and behavior in the financial industry. “But soon they were accompanied by allegations of post-crisis actions.”

Large U.S. banks were widely blamed for taking too much risk leading up to the 2008 financial crisis, which triggered the worst economic downturn since the Great Depression.

Instances of misbehavior among financial firms have continued, Tarullo said. He referenced Libor and foreign-exchange rate fixing scandals, inadequate money-laundering controls and efforts by some traders to use private exchanges to trade ahead other investors, so-called front-running.

Tarullo encouraged banks to resist thinking of regulatory compliance as an exercise in “check-the-box.” He said banks should prevent a “trading mentality” in which clients are seen merely as counterparties, from migrating to other parts of firms.

Tarullo said firms should also continue to reform compensation to avoid encouraging risky behavior. As part of rule making under the Dodd-Frank Law of 2010, he said an inter- agency rule on executive compensation would be “forthcoming in the not-too-distant future.”


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Federal Reserve Governor Daniel Tarullo said cases of misconduct among banks have continued with "disturbing regularity" even as their financial positions have strengthened.
federal reserve, tarullo, wall street, misconduct
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2014-46-20
Monday, 20 October 2014 12:46 PM
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