Top Federal Reserve Official Criticizes U.S. Banks for Cultural and Ethical Failures
Since 2008, complaints about some of the biggest banks in the United States have not been hard to find. One of the most recent commentators to speak out about problems with the banks, however, is a powerful official from the U.S. Federal Reserve. William Dudley, the president of the New York Federal Reserve bank, shared some harsh criticisms about ethical failings and cultural problems at major U.S. banks.
Miami foreclosure lawyers know that many place blame for the foreclosure crisis at the feet of these banks that encourage lenders to give out bad mortgage loans and then packaged those loans for sale to investors who thought they were buying AAA rated debt. Robo-signing scandals and other foreclosure problems have also come to light and cast further doubt on whether big banks are playing fair. Now, William Dudley has indicated that Wall Street investment firms and too-big-to-fail banks may have a systemic problem that calls for a “cultural shift” in order to restore the public’s trust in a troubled industry.
Banks Face Harsh Criticism
Dudley’s criticism came during remarks at the New York University School of Law. He did not name any specific banks that had prompted the remarks, but instead said that many financial institutions had displayed “an apparent lack of respect for law, regulation, and the public trust.” The harsh language was a surprise to many, as the president of the New York Federal Reserve has historically acted as a voice for the financial sector and for Wall Street when there are policy debates in Washington D.C.
Dudley attributes this lack of respect at big banks to deep-seated cultural failures and expressed hope that government actions would make a difference and encourage large financial institutions to make necessary changes. Dudley said that efforts to end the culture of “too-big to fail,” and efforts to force banks to shift their focus to being sustainable over the long term (rather than making a big profit in the short-term) could help to solve the problems that remain within the financial industry even after a shortsighted search for profits nearly caused the entire U.S. economy to collapse. He also suggested that tough penalties against banks, coupled with increased enforcement, could not only help force banks to behave better but could also potentially bring attention to the issue of corruption and ethical problems within the banking industry.
Dudley’s words came as a relief for many, who have long expressed frustrations that no banks or bank executives have been prosecuted for their actions that contributed to the subprime mortgage crisis and resulting foreclosure and market disasters. One former investment banker and author of a book on Goldman Sachs commented that it was about time and that “You never saw Tim Geithner be outspoken in his criticisms of Wall Street.”
Others argued that Dudley’s words were disingenuous as regulators have been accused of looking the other way when banks have lapsed in the past. Still, if Dudley’s remarks help to draw attention to all that banks did wrong in creating the foreclosure disaster, this can only be a good thing. The more attention that is paid to what the banks are doing and the greater the focus on reform, the less likely it is that banks will try to abuse their power in the future at the expense of innocent homeowners.
If you’re battling foreclosure in Miami or the surrounding areas contact Jacobs Legal for a confidential appointment to discuss your rights. Call 305-358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday from 5 p.m. to 6 p.m. on “Mortgage Wars,” discussing foreclosure topics that matter to YOU.
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