OVERNIGHT REGULATION: Obama’s top cop retrains focus on Wall Street

Welcome to OVERNIGHT REGULATION, where we’re yawning a bit after celebrating the Nationals’ division clinching win last night. But there’s no rest for the weary this week in Washington, as Congress and the agencies crank out regulatory and enforcement news in advance of an expected pre-election October slowdown.

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Answering criticism that his Justice Department has been soft on bank executives who helped usher in the Great Recession, Attorney Gen. Eric HolderEric Himpton HolderEx-AG Holder urges GOP to speak against Trump efforts to 'subvert' election results Tyson Foods suspends Iowa plant officials amid coronavirus scandal Money can't buy the Senate MORE is putting Wall Street on notice that he will pursue criminal charges in white collar crime cases wherever possible.


“[W]hen it comes to financial fraud, the department recognizes the inherent value of bringing enforcement actions against individuals, as opposed to simply the companies that employ them,” Holder said.

The strong language follows multibillion-dollar settlements with CitiGroupBank of America and JPMorgan Chase in cases involving claims the banking giants knowingly sold bad loans ahead of the crisis. Though record-breaking in their magnitude, the settlements involved no criminal action against those responsible.

But the AG is willing to put his money where his mouth is – or at least he’s urging Congress to. http://j.mp/1mc8FxS

— What Holder is proposing:

Holder says one of the biggest obstacles to criminal prosecutions is proving intent, and one of the best ways to do that is with the help of whistleblowers with knowledge of the inner-workings of financial industry firms. Raising the incentive for individuals to come forward, he argues, could lead to more convictions.

— What needs to happen:

Under the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), whistleblowers can receive up to $1.6 million, a figure Holder called “paltry “ in an industry that shelled out more than $26 billion in bonuses last year. He is calling on Congress to consider amending FIRREA, potentially bringing the statute’s whistleblower provisions in line with the False Claims Act. That law allows citizens to receive as much as a third of the funding recovered by federal investigators in fraud cases, but it only applies to government-funded programs.

— What they’re saying (and not):

The plan is getting a warm reception from whistleblower advocates.

“Wall Street whistleblowers who report financial crimes are putting their careers on the line.  Tying their financial rewards to an artificial cap, rather than to their degree of success, is a false economy – Neil Getnick, chairman of the group Taxpayers Against Fraud.

As of Wednesday evening, OVERNIGHT REGULATION had seen no reaction to the plan from financial industry groups, but watch this space for future updates.



Congress is still in session, as the House approved a stopgap funding bill that would keep the government open through Dec. 11. The bill, which also included a measure allowing the president to train and equip Syrian rebel groups, now heads to the Senate.

President Obama will host President Petro Poroshenko of Ukraine for meetings at the White House before attending a Democratic National Committee event in the evening.

The House Judiciary Committee will hold an oversight hearing focused on the Drug Enforcement Administration. DEA Administrator Michele M. Leonhart is scheduled to testify. http://j.mp/1thJhay

Across the Capitol, the Senate Banking Committee will convene a hearting entitled. “Assessing and Enhancing Protections in Consumer Financial Services” http://j.mp/1rbvzpf



The Obama administration will publish 176 new regulations, proposed rules, notices and other administrative actions in Thursday's edition of the Federal Register.

Keep an eye out for:

—The Occupational Safety and Health Administration (OSHA) will require companies to report more workplace injuries and deaths than previously required.

Employers will be required to report all injuries that occur at the workplace and lead to an employee being hospitalized within 24 hours of the incident. Previously, companies only had to report incidents that led to three or more injured employees.

Companies will still be required to report workplace deaths within 8 hours. http://j.mp/1p1IEgf

—The Consumer Financial Protection Bureau (CFPB) will exempt some banks and credit unions from an international money transfer rule that it just applied to companies like WesternUnion.

Financial institutions are required to disclose information to customers about the cost of sending money overseas and how long it will take to get there under CFPB rules. But the agency says insured banks and credit unions will not have to fully comply with the rule until 2020. http://j.mp/1r1LlS4 

—The U.S. Copyright Office will issue new rules for digital music licenses that could shake the iTunes world. 

The agency intends to update its royalty structure to accommodate digital music innovations as opposed to the current system that focuses on CDs and cassette tapes. http://j.mp/1uI5Fto

—The U.S. Department of Agriculture (USDA) will issue new rules for loans to farmers and small businesses in rural areas. These loans are often provided by branches of the USDA, such as the Rural Housing Service, Rural Business-Cooperative ServiceRural Utilities Service, and Farm Service Agencyhttp://j.mp/1mfA160

—The Food and Drug Administration (FDA) may loosen the restrictions on a dental device known as the salivary stimulatory system, so companies would only have to give a premarket notification before manufacturing the product. http://j.mp/1wqEnYu



DISSOLVE ATF? Republican legislation would eliminate the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), which has been a punching bag for GOP criticism following Operation Fast and Furious, in which the agency's guns ended up in the hands of Mexican drug cartels. http://j.mp/1wEGNG1

ENFORCEMENT WATCH: The Securities and Exchange Commission is giving up on a 25-year search to collect $62 million that a former Wall Street felon stole, after having only recouped $3.7 million, The Wall Street Journal reports. http://j.mp/Zqw8AM

SUNSCREEN: The Senate Health, Education, Labor and Pensions Committee approved the Sunscreen Innovation Act on Wednesday, which would speed up the government's sunscreen approval process for the first time since the 1990s. This comes after the House passed the bipartisan bill in July. http://j.mp/1u9Lnr4

YELP! Federal regulators are fining the online review site Yelp $450,000 for illegally collecting information about children. The Federal Trade Commission alleges Yelp used its mobile application to collect names and email addresses from children who said they were younger than 13 years old, which violates federal law. http://j.mp/1BNx5kB

FAST FOOD: The GOP is turning up the pressure on the National Labor Relations Board (NLRB) over its "radical" efforts to make it easier for unions to organize fast food workers. Two House Republicans wrote to the NLRB on Wednesday expressing their concerns with the agency's recent joint employer ruling. http://j.mp/1yi1aKJ

CAN'T BLOCK BLOCK: The Senate Health, Education, Labor and Pensions Committee on Wednesday approved Sharon Block's nomination to the National Labor Relations Board, all but assuring the former board member will rejoin the agency by the end of the year, after the Supreme Court ruled her previous term unconstitutional. http://j.mp/1BNys2G

F-SOCKED: The Government Accountability Office is raising questions about the performance of the Financial Stability Oversight Council (FSOC), created by the Dodd-Frank financial reform laws to monitor the economy and spot financial distress. http://j.mp/1Dl3XCV

PAYDAY LOANS: Federal regulators are cracking down on illegal lending scams that forced consumers to repay millions of dollars in unauthorized loans that they never borrowed. http://j.mp/1ASxQql



13: Number of votes from members of the Senate Health, Education, Labor and Pensions Committee in support of Block’s confirmation to the NLRB.

9: Number of votes against.

1: Number of senators who broke party ranks in the politically charged vote. Sen. Lisa Murkowski (R-Alaska) voted in favor of the nomination.



“[W]hen it comes to financial fraud, the department recognizes the inherent value of bringing enforcement actions against individuals, as opposed to simply the companies that employ them… Despite the growing jurisprudence that seeks to equate corporations with people, corporate misconduct must necessarily be committed by flesh-and-blood human beings.” – Holder during a speech at NYU.


We’ll endeavor to stay on top of these and other stories throughout the week, so check The Hill’s Regulation page early and often for the latest. And send any comments, complaints or regulatory news tips our way, via bgoad@thehill.com or tdevaney@thehill.com. And follow us at @ben_goad and @timdevaney.