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.
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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 ille
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