During a Reddit question and answer session today, top Obama economic adviser Gene Sperling responded to a question from one user about how a “free market economy” can “exist when big actors cheat, break laws, and only get fined. They just consider this a business expense. Should we break up the banks?”
Sperling’s full response is here. He starts by dodging the question about whether we should break up Wall Street banks, instead simply saying that the Dodd-Frank financial reform law “creates new tools to unwind large financial firms without destabilizing our entire economy.”
He then goes on to defend the administration’s record of prosecuting Wall Street banks, saying, “I think we have a strong record.” To justify this statement, he says the administration “has filed 10,000 financial fraud causes against nearly 15,000 defendants – including more than 2,900 mortgage fraud defendants.”
Notice that Sperling does not note who it is these defendants were — he fails to mention, for example, that not a single major executive at a Wall Street bank has been prosecuted for their role in the financial crisis. Rather, the prosecutions have been tilted towards loan officers and other low-level fraud. As Lanny Breuer, who was the Assistant Attorney General for the Criminal Division of the U.S. Department of Justice under Obama, admitted in a recent PBS documentary, “no Wall Street executives” were prosecuted by the administration.
As Senator Elizabeth Warren (D-MA) has noted, the real problem is that too big to fail has become “too big for trial.” Watch her remarks at a recent Senate hearing, where she castigated federal regulators for failing to bring criminal cases against Big Banks: