Massachusetts Senator Elizabeth Warren is marking the eighth anniversary of Lehman Brothers’ bankruptcy with a new push to investigate—and potentially jail—more than two dozen individuals and corporations who were referred to the Justice Department for possible criminal prosecution in 2011 by the Financial Crisis Inquiry Commission, a government-appointed group that investigated the roots of the 2008 financial crisis. None was ever prosecuted. The names of the referrals—including former Treasury Secretary Robert E. Rubin, who held a top job at Citigroup, and Citigroup’s former CEO, Charles Prince—became public earlier this year when the National Archives released new documents.
In a letter to the Justice Department’s inspector general, Warren calls the lack of prosecutions “outrageous and baffling” and asks the inspector general, Michael Horowitz, to investigate why no charges were brought. “[T]he DOJ record of action on these individuals, nearly six years after DOJ received the referrals, is abysmal,” she writes.
In a separate letter, to FBI Director James Comey, Warren asks for the immediate release of “any and all materials related to the FBI’s investigations and prosecutorial decisions regarding these referrals.” This disclosure is warranted, she writes, by Comey’s decision in July to release a lengthy and critical statement that included previously undisclosed information about Democratic presidential nominee Hillary Clinton’s use of a private e-mail server—even though Comey decided not to recommend that charges be brought against Clinton. “Your recent actions with regard to the investigation of former Secretary of State Hillary Clinton,” Warren writes, “provide a clear precedent for releasing additional information about the investigation of the parties responsible for the financial crisis.”
In an interview with Bloomberg Businessweek, Warren cited the anniversary of Lehman’s collapse as “a good occasion to stop and ask where the real accountability is and get some answers out of the Justice Department about why they haven’t prosecuted anyone.” She said Comey’s rationale for disclosing details of the Clinton investigation—Comey said it was warranted by “intense public interest”—creates a new precedent that obligates him to shed light on why the bankers and financial institutions referred by the FCIC to the Justice Department were never prosecuted. “Those same standards ought to apply to the worst economic crisis since the Great Depression,” Warren said. “There’s a clear public interest in finding out why none of these individuals or corporations were held responsible.”
The timing of Warren’s effort, less than two months before the presidential election, aims to encourage the next administration to prosecute financial crimes more aggressively than the Obama administration has done. “The public outrage is still there,” she said. “This is about reminding our government officials who they work for.” For years, Warren has pushed for regulators to take a tougher stance toward Wall Street. “She understands that CEOs don’t pay fines, shareholders do, and if they know prison is not an option, they’ll have a strong incentive to gamble by breaking the rules,” said Jeff Hauser, a lawyer who runs the Revolving Door Project at the liberal Center for Economic & Policy Research.
The timing is significant, because the statute of limitations on many financial crimes is 10 years. In her letter, Warren urges Horowitz, the Justice Department inspector general, to “act quickly to open an investigation” while there is still time to charge the entities that may have helped cause the crisis. “The point of a fresh look is to determine whether there’s evidence for a prosecution,” Warren said. “Obviously the FCIC thought there was.” Warren said she could envision the next administration sending Wall Street bankers to jail—and hopes that a future Clinton administration would act more aggressively than her predecessor’s. “I will do everything I can to make that possible,” she said.
Warren’s attempt to revive possible criminal prosecutions over the financial crisis is part of a broader effort she has undertaken to use congressional oversight, rather than legislation, to influence policy—and a glimpse of how she intends to wield power next year, especially if the Democrats take the Senate while Republicans keep control of the House of Representatives and block Democratic legislation. Democratic officials and Warren allies note that before she came to the Senate, Warren ran the panel that oversaw the Troubled Asset Relief Program. They also point out that her relentless criticism of the Trans-Pacific Partnership helped sour public opinion and halt the trade bill.
One reason Warren is emphasizing oversight is that the divided Congress isn’t moving much legislation. “That’s the only avenue she has,” said former Republican Representative Tom Davis, the chairman of the House Oversight committee from 2003-2007. Davis says Warren is particularly effective at using non-legislative channels to shape the public debate and push her own agenda—which could be problematic for a President Hillary Clinton. “Warren’s certainly a Democrat,” he said, “but she has her own brand and her own agenda, and don’t think she’d hesitate to take on Clinton if she felt like doing so would advance her goals.”
In a sense, Warren's letters to Comey and Horowitz already reveal as much—Rubin was, after all, Treasury secretary in Bill Clinton’s administration. Asked whether her new push is intended as a shot across the bow to Hillary Clinton, Warren demurred. “This is an inquiry into why there was no follow up when these names were referred to the DOJ for criminal prosecution,” she said.
But she agreed that Washington gridlock has made oversight an increasingly necessary political tool, and one that she plans to employ often. “The Senate can be a frustrating place,” Warren said. “Even in the best of times legislation moves slowly, and under the Republican majority, too much good legislation gets bottled up. The oversight and investigations process is an extremely useful tool for encouraging public officials to work in the interests of the public, not the interests of the industry they regulate.”