WASHINGTON (Reuters) - A coalition of Democrats led by Massachusetts Senator Elizabeth Warren and California Representative Maxine Waters is calling on the US Labor Department to hold hearings on whether big banks with criminal convictions should still be managing retirement money.
The June 4 letter to Labor Secretary Thomas Perez, signed by 12 members of Congress, comes just a few weeks after Barclays, JPMorgan Chase & Co, Citigroup Inc and the Royal Bank of Scotland all pleaded guilty to manipulating foreign exchange rates.
Criminal charges against large banks typically cause them to automatically lose certain regulatory privileges, unless they can convince federal regulators to grant them exemptions so they can continue their normal business activities.
At the Labor Department, banks must seek permission to continue managing corporate retirement plans such as 401ks. The Securities and Exchange Commission, meanwhile, also often must consider whether to grant a variety of waivers permitting banks to continue activities such as capital-raising and managing other peoples' money.
Waivers have become a hot topic since last year, after SEC Democratic Commissioner Kara Stein started publicly dissenting on granting some requests and questioned whether the government was creating a policy of "too big to bar" by rubber-stamping waivers.
Recently, Stein publicly dissented over some of the waivers that the SEC granted to the banks involved in the forex-rigging matter. The banks have since applied to the Labor Department for exemptions as well.
"We are deeply disappointed that the Securities and Exchange Commission, in waiving similar collateral consequences, rubber-stamped 10 waivers for these institutions with zero transparency or public input," the Democrats wrote in the letter. "We encourage you to not make this same mistake."
Waters and Warren have both been deeply critical of waivers.
Earlier this year, the Labor Department held a public hearing to vet a request over whether Credit Suisse should win an exemption after one of its units pleaded guilty to helping wealthy Americans evade taxes.
It is operating on a temporary exemption pending a final determination from the Labor Department staff.
Waters has also since called for a hearing on a request for an exemption for Deutsche Bank, which pleaded guilty to manipulating the Libor interest rate benchmark.
A Labor Department spokesman declined to comment on the letter.