Rep. Maxine Waters (D-Calif.) proposed the bill, called the Megabank Accountability and Consequences Act. Waters is a ranking member of the House Committee on Financial Services.
“Rampant violations of consumer protections by megabanks are just as consequential to a megabank’s safety and soundness as capital levels or other indicators of bank health,” Waters said. “This is why my bill, the Megabank Accountability and Consequences Act, will require federal prudential banking regulators to fully exercise their authorities and shut down megabanks that repeatedly show indifference toward consumer protection. It’s time to hold these financial institutions accountable and put people over profits.”
Under the proposed legislation, federal prudential banking regulators such as the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Federal Reserve Board would be required to fully utilize their authorities to shut down megabanks that repeatedly harm consumers. The agencies would also be required to hold culpable executives accountable.
The bill would have the Consumer Financial Protection Bureau issue regulations to further define what constitutes a pattern or practice of violations of federal consumer protection laws by megabanks. Such violations would warrant severe penalties, including restrictions on certain of the bank’s lines of business and removing culpable executives and banning them from working at another bank.
The proposed legislation also attempts to prevent the “insulated CEO” from escaping individual accountability by requiring megabank executives and directors to provide an annual written attestation that they have reviewed all lines of business and that the bank substantially complies with federal laws.
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A new House bill would require federal authorities to shut down megabanks that repeatedly harm consumers.