Enforcement Against the Biggest Banks

57 Pages Posted: 10 Oct 2020

See all articles by David T. Zaring

David T. Zaring

University of Pennsylvania - Legal Studies Department

Date Written: August 21, 2020


Being a big bank means the regular payment of huge fines to a number of different regulators, paired with profuse apologies, and promises to do better next time. This article makes use of a hand-collected dataset to show how this enforcement worked in the United States after the passage of the Dodd-Frank Wall Street Reform Act. American regulators have tended to hunt the big banks in packs, with multiple regulators pursuing fines against financial institutions for the same misconduct. Regulators frequently enforce in a “viral” manner; once they sanction one bank for a type of misconduct, the chances that they will sanction another bank for the same sort of misconduct increases. Some regulators like to bundle a variety of different unlawful actions by banks into one global settlement. Enforcement by DOJ can result in spectacularly expensive settlements compared to the level of enforcement by primary banking regulatory agencies; overall, DOJ sanctions in dollars dwarf those of all other agencies policing part of what a bank does. American enforcement, despite suspicion to the contrary, does not appear to protect domestic banks and discriminate against foreign ones.

Keywords: financial regulation, regulatory enforcement, administrative law

Suggested Citation

Zaring, David T., Enforcement Against the Biggest Banks (August 21, 2020). Available at SSRN: https://ssrn.com/abstract=3678439 or http://dx.doi.org/10.2139/ssrn.3678439

David T. Zaring (Contact Author)

University of Pennsylvania - Legal Studies Department ( email )

3730 Walnut Street
Suite 600
Philadelphia, PA 19104-6365
United States

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