The U.S. Federal Reserve on Monday took the rare step of banning a former banker from the industry — a move watchdog groups want to see more of.
Thomas A. Neely, Jr., a former executive vice-president at Regions Bank in Birmingham, Ala., agreed to the ban as part of a settlement of charges that he knowingly misled bank examiners about the extent of bad loans on the bank’s books in the first quarter of 2009. He will also pay a $100,000 fine for breaching his fiduciary duties.
Regions last year agreed to pay $51 million to settle charges related to false accounting, and two other former executives have received similar bans. The bank received a $3.5 billion bailout from the federal government during the financial crisis.
“It is relatively rare for the Fed to bar individuals from the banking industry, especially without a parallel criminal conviction,” The Wall Street Journal noted. “The Fed appears to have barred 13 bankers in the past five years, four of whom didn’t face criminal charges at the time.”
Though the Department of Justice is responsible for criminal prosecutions, politicians and watchdog groups have criticized the Fed and other regulators for failing to impose penalties on individuals for misconduct during the financial crisis.
“Even former Fed Chairman Ben Bernanke recently said he regretted that more individuals weren’t punished after the crisis,” the WSJ wrote.
Neely’s attorney said he “elected to settle and accept a ban rather than undergo the stress, inconvenience, and expense of protracted litigation. He looks forward to moving on with his life and career.”
The Fed, which had originally sought a $2.4 million fine, didn’t explain Monday why the penalty was reduced.