One of the biggest challenges that banks face today is recruiting and retaining qualified employees. The Federal Deposit Insurance Act prohibits banks from employing people convicted of certain criminal offenses.1 Today, the FDIC is proposing rules that implement recently enacted legislation to revise this prohibition by excluding certain offenses, like drug possession.2
I support the proposed rules, especially the provision that reduces lifetime bans for individuals who were 21 years old or younger at the time of their offense.3 This will create opportunities for more individuals to access employment opportunities and for banks to recruit qualified individuals.
There is a certain irony in the longstanding policy to ban individuals who were convicted of low-level crimes. After all, there’s been a number of top executives at large banks who have repeatedly presided over consumer abuses, money laundering, and other financial crimes, and the only accountability we usually seek is to make the bank pay a fine. Bank regulators almost never hold individuals at the top responsible for the crimes that took place under their watch. Yet, we’ve never batted an eye when banning a low-level employee from ever working in the banking industry again.
I think our proposed rule today is a small step toward getting the balance right. But more work must be done to hold executives responsible when their banks engage in repeat offenses.
- 12 U.S.C. § 1829
- The Fair Hiring in Banking Act was included in the James M. Inhofe National Defense Authorization Act for Fiscal Year 2023.
- If the covered offense was committed when the individual was 21 years old or younger, and it has been more than 30 months since the sentencing, the offense is excluded from the prohibition.