Barclays and Deutsche Bank Under NY Regulator Lawsky's Scrutiny

New York's banking regulator is looking to place government monitors in the American offices of Barclays and Deutsche Bank as part of its probe into alleged manipulation in the foreign-exchange market.

The New York State Department of Financial Services (DFS), headed by Superintendent Benjamin Lawsky, was pushing to install monitors at the two banks to scrutinise historical conduct and current operations, an unnamed source told Reuters.

New York investigators are expected to reach an agreement soon with the banks to install on-site monitors, The Wall Street Journal reported.

Barclays and Deutsche Bank have been chosen because data collected pointed to the greatest potential problems there, WSJ added.

Pursued by Reuters, Barclays refused to comment and Deutsche Bank did not address questions about monitors. A spokesman for the DFS was not immediately available.

"The bank is cooperating with those investigations, and will take disciplinary action with regards to individuals if merited," a Deutsche Bank spokeswoman told the news agency.

Hippocratic Oath

Thinktank ResPublica is pushing for bankers to take a moral oath – like the Hippocratic Oath sworn by doctors – following the spate of financial scandals that have rocked global markets over the last few years.

The group has suggested an oath whereby workers at financial institutions pledge to behave with moral propriety when joining the banking world.

Tax Avoidance

Earlier in the month, executives from Barclays, Deutsche Bank and hedge fund Renaissance Technologies traded barbs with a powerful US Senate committee that has accused the lenders of selling option products to hedge funds to help them avoid taxes.

Presiding over the near five-hour inquiry, Senator Carl Levin, the Michigan Democrat who heads the US Senate Permanent Subcommittee on Investigations, which is looking into tax avoidance strategies, dwelled on who controlled the option accounts: the banks or the hedge funds.

Levin in one instance accused a senior Barclays executive, Gerard LaRocca, of "waffling" when answering a question, Reuters reported.

The world has witnessed a spate of market manipulation scandals that have caused a near-collapse in the global financial markets, such as Libor fixing, currency rigging, and toxic mortgage products.

Politicians and regulators have also said that the mis-selling of consumer products, such as payment protection insurance, credit card fraud insurance and complex derivatives, have also cost the banks billions and stemmed from a 'toxic' sales culture at some of the world's largest institutions.