U.S. lawmaker questions Deutsche's petition following criminal case
By Sarah N. Lynch
WASHINGTON (Reuters) - A key Democrat in the U.S. House of Representatives is calling for a public hearing to vet a request by Deutsche Bank to continue managing retirement accounts, after one of its units pleaded guilty to manipulating interest rates last month.
The comments by Financial Services Committee Ranking Member Maxine Waters, made in a statement to Reuters, are likely to bring a fresh round of scrutiny to Deutsche Bank amid a growing controversy over waivers that have divided U.S. agencies.
The bank already came under fire earlier this week by some Democrats over a separate regulatory waiver it received from the U.S. Securities and Exchange Commission, which permits the bank to continue selling stocks and bonds to the public without regulatory review.
Deutsche Bank, which agreed to pay $2.5 billion (£1.64 billion) to U.S. and British authorities for manipulation of the Libor interest rate benchmark, is also asking the Labor Department for another exemption on retirement accounts.
"I'm troubled to see yet another bank plead guilty to criminal charges only to turn around and ask federal regulators to allow it to continue doing businesses as if it has done nothing wrong," Waters told Reuters late on Wednesday.
"I hope that the Department of Labor appropriately scrutinizes this waiver request by Deutsche Bank, and I believe a public hearing would provide much needed transparency to an historically opaque process."
A Deutsche Bank spokeswoman declined to comment.
The Labor Department has not yet decided whether to propose an exemption for the bank. If one is proposed, it will be issued for public comment and a hearing could potentially be held.
Criminal cases against financial firms trigger a cascade of regulatory consequences which can disrupt their business. To avoid any problems, banks typically file applications with the regulators seeking exemptions or waivers so they keep things running smoothly.
Exemptions from the Labor Department allow banks to keep managing retirement accounts, while SEC waivers often pertain to activities involving both capital-raising and money management.
Regulatory waivers have become a lightening rod for controversy over the past year after SEC Democratic Commissioner Kara Stein started questioning whether her agency was simply rubber-stamping waivers and being too soft on repeat offenders.
Democrats on Capitol Hill have also raised concerns.
Earlier this year, the Labor Department held an unusual public hearing at Democrats' request to vet a similar application by Credit Suisse to keep managing retirement accounts after the bank pleaded guilty to helping wealthy Americans evade taxes. That application is still under review.
Deutsche Bank, in its exemption request to the Labor Department dated April 23, argues that denying its request could be costly for its clients.
If the bank is not allowed to manage retirement accounts anymore, it said employer-sponsored plans could face costs of $15,000 to $40,000 in the search for a new manager, according to a copy of the application.
Liquidating clients' portfolios could also cost between $5 million and $7 million.
The bank also argues that the units managing retirements are separate from the unit that got in trouble and "have their own boards of directors" and their own "dedicated legal and compliance teams."
The bank can continue managing retirement money until it is formally sentenced, according to a department spokesman.
(Reporting by Sarah N. Lynch; Editing by Soyoung Kim and Ted Botha)
