Public Citizen is calling on the Comptroller of the Currency to revoke the charter of Rabobank.
Public Citizen is also calling on the Federal Deposit Insurance Corporation to initiate proceedings to terminate the status of Rabobank as a insured depository institution.
Rabobank, based in the Netherlands, is a multinational financial conglomerate with more than $700 billion in assets.
Its US affiliate is the combination of six separate banks now operating under the Rabobank brand, serving California with 107 branches with $13 billion in assets.
Earlier this month, the U.S. affiliate, Rabobank National Association, pled guilty to a felony conspiracy charge for impairing, impeding and obstructing its primary regulator, the Comptroller of the Currency by concealing deficiencies in its anti-money laundering program and for obstructing the OCC’s examination of Rabobank.
In a letter to federal officials, Public Citizen argued that “money laundering makes possible the insidious trade in illegal, harmful drugs that have blighted the health of millions of Americans and led to fatal violence on the street.”
“While the U.S. has expended billions of dollars on the physical security of the border, and billions more addressing street crime and health repercussions, we believe federal efforts to combat money laundering have fallen short.”
The letter was written by Public Citizen’s Bart Naylor.
“The current settlement with Rabobank perpetuates this inadequate response,” Naylor wrote. “The bank will pay some $360 million, a fine effectively borne by shareholders,” But it will not face a real penalty. Real penalties can establish a deterrent so that Rabobank and other firms will take seriously their efforts to remove themselves from the trafficking in illegal drugs.”
National banking law provides for real penalties, Naylor said.
Naylor said that if the FDIC “determines that an insured depository institution has engaged or is engaged in unsafe or unsound practices,” the FDIC shall notify the appropriate regulator of this finding, and thereafter “serve written notice to terminate the insurance status of the institution.”
“We ask the FDIC to make such a finding and issue this notice,” Naylor said.
Federal statutes specifically identify money laundering violations as grounds for revoking Rabobank’s banking charter, Naylor said.
As provided under 12 USC 93(d), “if a national bank has been convicted of any criminal offense” under the anti-money laundering provisions, “the Attorney General shall provide to the Comptroller of the Currency a written notification of the conviction.”
With this, the Comptroller “shall issue to the national bank a notice of the Comptroller’s intention to terminate all rights, privileges, and franchises of the bank . . . and schedule a pre-termination hearing.”
The Comptroller is directed to weigh the role of directors and “senior executive officers” in the violations.
Naylor said that since federal officials charged that Rabobank acted through directors, “then we believe Comptroller should consider whether these section applies and if so, also take the appropriate action to revoke Rabobank’s charter.
Rabobank misconduct has spanned numerous operations, Naylor said.
“Unscrupulous trading practices involving the manipulation of the LIBOR currency rate led to a $1 billion fine,” Naylor said. “Federal regulators have brought severe sanctions against smaller banks, and it should bring the same penalties to larger ones. We reject the assertion that some banks are too big to jail, an observation that bringing equal justice to large banks would destabilize the financial system.”
“In practice, revoking Rabobank’s charter and termination of insurance would provide that this California bank could operate with new owners. In fact, Rabobank has reportedly sought to sell this bank. This would actually lead to less concentration and more competition in this important market.”
Naylor said that Public Citizen has yet to hear from either the Comptroller of the Currency or the FDIC.