In our September 2007 survey of bank regulatory enforcement actions, we predicted that turmoil in the mortgage markets would produce a commensurate increase in the scrutiny that the bank regulators are applying to violations of safe and sound bank practices, particularly loan underwriting standards and consumer protection. See Vartanian and Labitzky, 2007 Bank Enforcement Trends: Foreign-Owned Banks in the Spotlight, 89 Banking Rep. (BNA) 475 (Sept. 24, 2007).
Tom Vartanian's and Katie Dang's recent article on bank enforcement actions for the latter half of 2007 notes that this trend appears to be continuing and the financial stakes increasing dramatically. See Vartanian and Dang, Bank Enforcement Trends for 2007: The Axe Begins to Fall Harder, 90 Banking Rep. (BNA) 720 (Apr. 14, 2008). The authors believe the focus of bank enforcement and the nature of the actions will adjust based on the critical problems and dislocations in the financial markets that have now erupted and are reaching beyond the arena of mortgage lending instruments. The authors also discuss policy statements released by the bank regulatory agencies as a prelude to these types of enforcement actions.
The article includes a discussion of the continuing debate over professional responsibility given the recent Grant Thornton decision by the Court of Appeals for the District of Columbia Circuit as well as current developments and actions involving the Bank Secrecy Act.
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