On the campaign trail, Democratic presidential candidates Bernie Sanders and Hillary Clinton like to beat up on the financial industry. Sanders has charged that the entire "business model of Wall Street is fraud," while Clinton is fond of saying that "there should be no bank too big to fail and no individual too powerful to jail."
Both candidates, it seems, hope to capitalize on lingering anti-Wall Street sentiment and win voters who suspect unscrupulous and predatory mortgage lending practices triggered the 2008 economic collapse. But by the time the next president is sworn into office next January, it might be too late to prosecute financial executives for their role in the meltdown. Many of the statutes of limitations have already run out, and the 10-year window for federal prosecution of mortgage fraud is quickly closing.
As Phil Angelides, the former head of the Financial Crisis Inquiry Commission (FCTC), put it in an interview with VICE News, "The clock is ticking."
The FCTC was an investigatory body for the financial crisis that has been likened to the 9/11 Commission. In 2010, it turned over to the Obama administration all of the evidence it had amassed, including whistleblower testimony and documents from internal bank risk assessments of faulty mortgages.
Six years later, not a single Wall Street executive has been put behind bars.
"I'm very concerned that there hasn't been a full criminal investigation," Angelides remarked.
Former Citigroup executive Richard Bowen, one of the most high-profile financial industry whistleblowers to emerge from the crisis, has been following the lack of Wall Street prosecutions with dismay. In 2006, he sounded the alarm that Citigroup was involved in massive mortgage fraud, and later turned over thousands of pages of documents to the Securities and Exchange Commission. He even met with the US Department of Justice to help build a case against the bank, and passed along the names of senior managers as well as organizational charts outlining the people who were willfully peddling faulty mortgages at Citigroup.
Then the banking corporation settled with the DOJ for $7 billion in 2014.
"Citigroup acknowledged it made serious misrepresentations to the public — including the investing public — about the mortgage loans it securitized," a DOJ press release said at the time. "The settlement does not absolve Citigroup or its employees from facing any possible criminal charges."
But no one at Citigroup was held criminally responsible. Bowen now worries that the evidence he shared will go to waste, since most of the fraudulent conduct he documented occurred between 2006 and 2007.
"If the government is serious about pursuing criminal charges against Citigroup, I'm always open to help out," he told VICE News — but he hasn't heard from the government since 2013.
The DOJ declined to comment to VICE News about Bowen and fraud at Citigroup.
'DOJ already has in its hands the roadmap to systematic impropriety on Wall Street.'
Bowen does not hold out hope that any of today's presidential candidates — with the exception of Sanders, who he doubts has a real shot at winning — will be tougher on the Citigroup executives he blew the whistle on.
"Follow the money," he said, referring to the more than $800,000 Citigroup has contributed to Clinton over the course of her political career.
Angelides, a former California State Treasurer and unsuccessful Democratic candidate for governor of California, is less pessimistic. He has endorsed Clinton for president, and expects her to be "tough" on Wall Street. But he knows that time is running out to prosecute the crimes that have already been documented.
Earlier this month, Angelides sent a letter to Attorney General Loretta Lynch reminding her that the deadline to prosecute financial crimes committed in 2006 and 2007 is rapidly approaching.
"DOJ already has in its hands the roadmap to systematic impropriety on Wall Street," Angelides wrote.
The marquee piece of evidence against the financial industry, he said, is a batch of files called the Clayton Holdings documents, in reference to the research firm of the same name. Nearly all of the biggest mortgage banks on Wall Street — JPMorgan Chase, Goldman Sachs, Morgan Stanley, and Citigroup — hired Clayton Holdings to double-check that the mortgages they were selling to investors were sound. After sampling around 900,000 mortgages in 2006 and 2007, Clayton told its clients that around 300,000 failed to meet standards — the homeowner might have lacked assets, for example, or the underlying loan document might have been faulty.
The banks didn't ask Clayton to do any more loan assessments. Instead they withheld the information from shareholders and sold the mortgages to investors as though they were solid. The Clayton documents became a key piece of evidence that the DOJ used to extract nearly $40 billion in fines from 18 major financial institutions following the 2008 crisis.
Yet not a single executive was held responsible in those cases, provoking the ire of investigators and the public alike.
"Are we really supposed to believe this was some sort of immaculate corruption?" Angelides asked incredulously.
Speaking to VICE News after he sent his letter to Lynch, Angelides expressed frustration at the DOJ's reluctance to prosecute under her leadership and that of her predecessor, Eric Holder.
"It's a mystery to me why misconduct from individuals at the higher levels was not pursued," he said.
The "misconduct" in question was the packaging and selling of billions of dollars of mortgages that the Justice Department says banks knew were faulty — and which devastated the pocketbooks of ordinary Americans. More than 5 million homes were lost to foreclosure during the crisis, while black households disproportionately saw upwards of 40 percent of their non-home-equity wealth vanish.
Though the crisis occurred eight years ago, fallout from it and the recession that followed has haunted the current presidential campaign. Sanders, a self-professed "democratic socialist" who has energized the Democratic Party's left wing, often suggests that Clinton's lucrative speaking engagements with Goldman Sachs and the millions of dollars she has accepted from big banks amount to an inappropriately cozy relationship with the financial industry. Clinton has countered by loudly trumpeting her own plan to rein in Wall Street, which includes a proposal to lengthen the statute of limitations for financial crime.
Both candidates have promised to do more to put bankers behind bars.
"It is an outrage that not one major Wall Street executive has gone to jail for causing the near collapse of the economy," Sanders has said. For her part, Clinton has pledged that under her administration, "when people commit crimes on Wall Street, they will be prosecuted and imprisoned."
But for now, the decision to prosecute remains in the hands of the Obama administration.
Over the past six years, Obama's Justice Department has managed to extract more than $170 billion in fines and settlements from nearly every major bank in the United States. In each case, the DOJ has issued a "statement of facts" that outlines the fraud the government suspects occurred at the bank.
William K. Black, a renowned former bank regulator who played a key role in exposing the fraud at the center of the savings and loan crisis of the late 1980s, is now a leading critic of the DOJ's financial settlement strategy. The fact that the DOJ managed to extract billions of dollars in fines, he has noted, suggests that the Obama administration is sitting on actionable criminal cases that it is failing to pursue.
"Do you honestly believe the government has a strong enough case to wring billion-dollar settlements out of almost every bank in the country, but they don't have enough evidence to bring criminal charges?" he asked. "The odds of that being true are close to zero. It's nonsense."
Top government officials have publicly defended their strategy by suggesting that criminal prosecutions involving some of the country's biggest financial institutions would potentially have a deleterious effect on the economy.
"In reaching every charging decision, we must take into account the effect of an indictment on innocent employees and shareholders," Lanny Breuer explained in 2012 while serving as the assistant attorney general for the DOJ's criminal division. "Those are the kinds of considerations in white-collar crime cases that literally keep me up at night."
Eric Holder made a similar point in an interview with the Financial Times that was conducted after he left the DOJ last year, saying he had no interest in "trying to make examples of people" with jail time.
But last September, Deputy Attorney General Sally Yates announced a new policy to go after individuals who commit financial crimes — a sharp divergence from the strategy championed by Holder and Breuer in the early days of the financial crisis fallout. In a speech at NYU Law School, she promised that the DOJ will now pursue criminals "regardless of whether they commit their crimes on the street corner or in the boardroom."
The DOJ confirms that the new policy is now in full effect.
"Any civil or criminal corporate matters initiated after September 9 are now being pursued in accordance with the directives in the Yates memo," DOJ spokesperson Patrick Rodenbush said. "The department is committed to aggressive investigation and prosecution of corporate wrongdoing."
But the DOJ declined to point VICE News toward a single case in which the Yates memo led to a criminal charge. The department did create a Mortgage Fraud Task Force in 2012 to push for more white-collar convictions — but the Inspector General's office later accused the DOJ of inflating its conviction numbers and secretly de-prioritizing mortgage fraud.
Over the past three years, the task force has led to over 1,000 mortgage fraud prosecutions of low-level bank employees, loan underwriters, and local mortgage brokers. But Angelides dismissed the effort as middling.
"These are the mice," he said, "not the lions" — banking executives who knew their company's mortgages were bad but sold them anyway.
Angelides suggests that the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) could be used to go after those executives.
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FIRREA was crafted in the wake of the savings and loans crisis, when some 1,100 individuals faced criminal prosecution and the heads of several major banks served jail time. Bart Dziv, a former attorney with the Senate Committee on Banking, Housing, and Urban Affairs, helped to write FIRREA, and thinks it could still be useful in going after bankers who were responsible for the last financial crisis.
"To see nobody held accountable is extremely frustrating," he said. "And it gets much harder if you let the evidence grow stale for nine years."
Dziv suggests that the DOJ direct its agents to comb through the communications of top bank executives to turn up any indication that they knew mortgages were faulty.
"That's what it takes — a text message or email from a top executive expressing knowledge of the problem," he said.
When asked if the DOJ is considering whether to use FIRREA to go after Wall Street executives, DOJ spokesman Rodenbush answered, "We decline to comment on any investigations that may be ongoing."
Angelides remains hopeful that the Obama administration will make a final push for corporate accountability.
"For the sake of people's faith in the judicial system, and so that law enforcement really has a deterrent effect, the DOJ has an obligation to lay out to American people what it has done and what it intends to do about it," he said.
But when pressed about whether he thinks that's likely to happen, Angelides didn't seem confident: "I don't have a clear indication that they will marshal the resources, unfortunately; no."
Follow Avi Asher-Schapiro on Twitter: @AASchapiro