Sallie Krawcheck, a former executive at
Bank of America Corp. and
Citigroup Inc., called government fines and charges levied on the largest U.S. banks a tax on excess profits.
“There is a cost of overearning in which some of that money gets paid back to the government in fines,” Ms. Krawcheck said Wednesday at The Year Ahead: 2014, a two-day conference sponsored by Bloomberg in Chicago.
The six biggest U.S. lenders have piled up more than $100 billion in legal costs since the financial crisis, including settlements and lawyers’ fees, data compiled by Bloomberg show. JPMorgan Chase & Co., which posted three years of record profit through 2012, reached a $13 billion settlement tied to mortgage bond sales yesterday. The firm still faces criminal probes that range from possible bribery in Asia to its relationship with Ponzi scheme operator Bernard Madoff.
“We can talk about whether it’s a fine for wrongdoing, we can also talk about it as a tax on over-earning,” Ms. Krawcheck said about JPMorgan’s accord. “It really has implications for the industry as you look to other banks and what they are potentially going to pay.”
Ms. Krawcheck was
Citigroup’s chief financial officer and head of strategy, and later ran the bank’s wealth management division until late 2008, when she was replaced by current chief executive Michael L. Corbat. She joined
Bank of America in August 2009 to run wealth management before being ousted amid a management shakeup in September 2011.
Ms. Krawcheck didn’t see executives acting illegally during her career, she said, insisting that while at
Citigroup, she spent hours looking for activities that broke the law.
“I was at senior levels in these companies. I saw people who were overconfident, I saw people who took on too much risk, I saw people who made mistakes. I never saw the law broken,” Ms. Krawcheck said. “Stupidity is not a crime; too much risk-taking is not a crime.”
TWITTER BOARD
Also at the conference, Ms. Krawcheck, owner of 85 Broads Unlimited, a network that promotes women as business leaders, called Twitter Inc.’s lack of women on its board “a joke,” showing that Silicon Valley is no better than Wall Street when it comes to female representation.
She said she’d had hopes that technology companies would have a better track record. Instead, the situation is “just as bad” as the financial services industry.
“This is a fairness issue,” she said.
Twitter, the microblogging site that raised $2.09 billion in an initial public offering this month, has an all-male, seven-member board. Facebook Inc., which had a similar lack of representation when it went public in May 2012, now has two female directors, including chief operating officer Sheryl Sandberg. Twitter has said it’s in discussions to diversify its board.
The slow progress proves women still “have a ways to go” to gain equal footing in the business world, said Carol Browner, a former White House energy adviser who also spoke on the panel.
Women think differently than men and “can see problems they don’t see,” said Ms. Browner, who was an adviser to President Barack Obama and administrator of the Environmental Protection Agency from 1993 to 2001.
(Bloomberg News)
