A U.S. government oversight body is proposing a way to hold banking and investment executives more accountable for criminal activity and fraud committed by staffers against their customers.
An inspector general is suggesting that top Wall Street executives be required to sign an annual statement promising that criminal or civil fraudulent activity did not occur while they were in charge, a pledge that could lead to more top executives being sent to prison.
The proposal is included in a quarterly report sent to Congress on Wednesday by the Troubled Asset Relief Program (TARP), which was created in 2008 to bail out a U.S. financial system that was battered by historic crashes in the housing and securities markets.
The report said 85 bankers have been charged with a crime and 36 have been sent to prison while more than $10 billion in misappropriated money has been recovered in the past few years.
While TARP has been successful at prosecuting top executives of small- to medium-sized banks, it has not done the same with chief executive officers at large Wall Street firms.
TARP Special Inspector General Christy Goldsmith Romero said she felt compelled to suggest a reform of the financial system for the first time after seeing many cases where top executives seemed immune from prosecution.
"If a CEO says that their institution is too big or too complex to be able to certify about crime or fraud, then they have a much bigger problem — one that should be unacceptable, particularly at banks deemed so systematic that taxpayers bailed them out," Goldsmith Romero said in the report.
The proposal to get tough on top banking and investment executives comes as many citizens are upset they have yet to fully recover from the 2008 financial meltdown, America's worst financial crisis since the Great Depression in the 1930s.
CEO accountability resurfaced as a top priority for some lawmakers in September after Wells Fargo and Company, a financial services company with nearly $2 trillion in assets, agreed to pay $185 million to settle claims that lower level workers may have created 2 million accounts without customers' knowledge. Wells Fargo CEO John Stumpf resigned in the wake of the scandal, but U.S. Senator Elizabeth Warren and other legislators believe he should also be criminally prosecuted.