For years, Wall Street leaders charged regulators swarmed all over their companies—not because they needed to, but because they were too sensitive to allegations they fell asleep at the switch in the run-up to the financial crisis. Now the same thing is happening in the aftermath of Wells Fargo's consumer fraud, JPMorgan Chase Vice Chair Stephen Cutler claimed Wednesday.
After enduring verbal assaults from congressional Republicans and Democrats over the Wells Fargo debacle, financial regulators of all stripes are bending over backwards to try to prove they aren’t weak, Cutler said.
“Regulators feel they are under attack,” Cutler told a forum on compliance trends at Finra's annual conference in Washington, D.C.
Several years after the scam started, the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau fined Wells Fargo $185 million last fall.
In some cases, four to six regulators are imposing sanctions for the same offense, Cutler said.
“Every regulator feels a need to impose its own sanctions. Lots of times regulator A won’t take into account what Regulator B is doing. We have to find a way to end that,” said Cutler, who once headed up the enforcement division of the Securities and Exchange Commission.
The Trump administration and Senate Banking Committee Chair Mike Crapo have made overlapping regulations among their targets.
House Financial Services Committee Chair Jeb Hensarling’s Financial CHOICE Act takes aim at the practice. The bill recently passed the committee, where it appears on its way to full House passage in a handful of weeks. It's future in the Senate is in doubt, however.
“[Overregulation is] frustrating to all of us when the rule book is not clear and [examiners] say it doesn’t matter,” said Cutler.