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The rare public hearing at the U.S. Department
of Labor will feature speakers ranging from bank officials and
labor lawyers to consumer advocates such as Ralph Nader, and
even Holocaust survivors.
Companies that break criminal laws or commit fraud are generally
banned from activities such as conducting private offerings or
managing pension plans. But regulators, including the DOL and
the U.S. Securities and Exchange Commission, often grant waivers
that allow them to continue operating as usual.
Now regulators are facing a push-back after several banks became
repeat offenders. Critics say allowing wrongdoers to continue
unimpeded dilutes their punishment and paves the way for future
misconduct.
Credit Suisse <CSGN.VX> pleaded guilty last May to a U.S.
criminal charge it conspired to help U.S. clients evade taxes.
It agreed to pay $2.5 billion in penalties, but the charge also
prevents the bank from managing U.S. pension funds unless it
gets an exemption from the Labor Department.
The bank has asked for one, saying its clients would otherwise
"need to go to the expense and effort of finding new managers."
In the past, similar requests were granted with little public
debate. In fact, Credit Suisse's 30-page application to the DOL
was modeled in part on an older request submitted by UBS AG <UBSG.VX>,
according to documents seen by Reuters.
Officials at the DOL directed Credit Suisse to redline its own
application against the UBS version to compare the differences,
a person familiar with the matter said.
Policymakers and lawmakers have questioned whether the waivers
are rubber-stamped. SEC Democratic Commissioner Kara Stein
criticized similar exemptions for Royal Bank of Scotland Group
Plc <RBS.L>, BNP Paribas SA <BNPP.PA> and Bank of America Corp <BAC.N>,
saying regulators treated banks as if they were "too big to
bar."
In Credit Suisse's case, the DOL first proposed granting an
exemption last fall. Officials decided to hold a public hearing,
however, after an outcry from critics.
If an exemption is approved, Credit Suisse would need to meet
certain conditions, such as hiring an independent auditor.
A Credit Suisse spokesman said the bank respectsthe rights of
opponents who will testify against the waiver, but that none of
their arguments are relevant or newsworthy.
(Reporting by Sarah N. Lynch. Editing by Andre Grenon)
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