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Federal Charges Against U.S. Bank Show the Need for More Consequences, Not Fewer

Feb. 15, 2018

Federal Charges Against U.S. Bank Show the Need for More Consequences, Not Fewer

Statement of Robert Weissman, President, Public Citizen

Note: Today, U.S. Bancorp was fined more than $600 million for allegedly failing to detect a vast illegal online payday lending scheme. Federal prosecutors accused the bank of failing to properly monitor the business activities of online payday loan shark Scott Tucker, who was sentenced earlier this year to more than 16 years in prison. Tucker’s fraud case was recently highlighted in the Netflix documentary “Dirty Money.” U.S. Bancorp is the parent company for U.S. Bank, which was charged with violating the Bank Secrecy Act.

Just over one month ago, a federal judge appropriately sentenced loan shark Scott Tucker to more than 16 years in prison. But U.S. Bank, which knew about, facilitated, failed to report and profited from his activities, is escaping criminal prosecution.

This inadequate penalty highlights how bankers repeatedly have faced insufficient consequences for their actions.

According to prosecutors, U.S. Bank officials ran their compliance system mainly with regard to internal staffing concerns, rather than any meaningful evaluation of a problematic transaction’s risk. Then the corporation “deliberately concealed” this information from its main regulator, prosecutors said.

The deferred prosecution agreement is indicative of U.S. Bank’s special status as a corporate giant. It is inconceivable that a street criminal – or the operator of a predatory payday lending business – would receive this kind of treatment.

Until banks face severe consequences when they are caught for systematic, large-scale, profitable and consequential violations, Wall Street and giant corporations will keep thumbing their noses at the criminal law.

Having failed to hold the corporation accountable, prosecutors now must direct their attention at company executives and examine whether they should be held criminally liable.

Equally galling is the behavior of Trump administration officials, including acting Consumer Financial Protection Bureau (CFPB) Director Mick Mulvaney, who are taking steps to expand the business of predatory online loans just as bad actors are facing severe civil and criminal penalties stemming from the very same loans.

Just yesterday, lawmakers in the U.S. House of Representatives passed legislation that would allow lenders to override state-imposed interest rates on high-cost loans, potentially legalizing the kind of predatory loans sold by Tucker and others like him.