MR. TOM GJELTENThanks for joining us. I'm Tom Gjelten of NPR sitting in for Diane Rehm. Diane has a cold, but she'll be back soon. The 2008 financial crisis still hangs over us. The Obama administration is now planning to ease mortgage lending standards for the first time since the crisis. Concerns about too much loose credit are giving way to concerns about stifled growth. And there's still debate about what to do with those banks who were big players in the crisis.

MR. TOM GJELTENLast fall the Justice Department came to a $13 billion settlement with JPMorgan, and it's said to be close to agreements with others. But many say the big banks are getting off too easy. Here to talk about the ongoing effort to hold bankers accountable for the crisis: Devlin Barrett of The Wall Street Journal and Michael Greenberger of the University of Maryland. Andrew Sandler, an attorney in private practice, joins us by phone from Birmingham, Ala.

MR. TOM GJELTENAnd on the phone with us from New York is Jessica Silver-Greenberg of The New York Times. You can join our conversation, whether you want to bash the bankers or defend them. Our phone number is 800-433-8850. Our email is drshow@wamu.org. You can also find us on Facebook or Twitter. Hello, Devlin. Hello, Michael.

PROF. MICHAEL GREENBERGERThanks, Tom.

GJELTENAndrew, Jessica, thanks for joining us.

MR. DEVLIN BARRETTHello.

MS. JESSICA SILVER-GREENBERGHi.

MR. ANDREW SANDLERGood to be here.

GJELTENGreat. We do have some news, Devlin, to start off with this morning. Your newspaper is reporting that the Obama Administration and federal regulators are now beginning to or thinking about easing mortgage lender lending standards. Tell us what's behind that.

BARRETTRight. Well, what they're saying now is that after the crisis there was a push to drive up the required down payments for mortgages and put it up to something like 20 percent, which was sort of a traditional number that had existed before the big housing bubble. And what they've said now is that actually we don't think we can do 20 percent because we're too concerned that imposing a 20 percent requirement will actually chill the housing market too much.

BARRETTAnd the housing market is already so weak that, according to the administration, it's weighing down the rest of the economy. So they're easing up on these down payment limits and a few other conditions they were going to put on Fanny and Freddie, in the hopes that it keeps the housing market going and maybe even gives it a little bit of a boost because obviously rates have come up in the last year, as well, which has put a little bit of a chill in the process.

GJELTENWell, Andrew Sandler, given what a problem of loose credit meant for the origins of the financial crisis, is there any risk to this move, in your view?

SANDLERWell, I think the problem, Tom, here is that the government has been telling the banks, we're going to apply 20/20 hindsight to the lending activity that you engaged in years ago. The result has been that banks, spurred by this government effort, have become very, very conservative in their lending activity. And this has constricted access to credit. The government is now shifting its position and saying, we need to get more credit out there.

SANDLERI think the bankers are saying, just tell us what the rules are. We'll play by the rules, but then you can't change the rules on us, post-facto, some years from now, which is the view that I think many have as to what is going on with respect to the 2008 crisis.

GJELTENWell, you say banks are now getting very conservative, have gotten very conservative about lending. They certainly weren't conservative in the months preceding the 2008 crisis. Right, Michael Greenberg?

GREENBERGEROh, that's absolutely right. I mean, the banks were essentially giving away mortgages with no down payments or no payment on principal. And mortgages were being executed on automobile hoods in shopping mall parking lots. So that the pendulum swung in a direction that only aggravated the situation. Twenty percent was the standard in the industry. But basically you were going from almost nothing being put down, then the assessment was, let's make -- go back to the 20 percent figure.

GREENBERGERI have lots of problems with easy credit, but I'm not too troubled by this tweaking that the government has done because my understanding is that the target would be 10 percent. And I think, under the circumstances, that's dramatically better then what was saw in the run-up to the 2008 crisis. And I do think that there is a direct relationship to the purchase of a home and the stimulation of the economy. And I think it's -- the new policies are far better than what we had, which was essentially the Wild Wild West before the meltdown.

GJELTENThe Wild Wild West. Well, I know our listeners are going to want to know more about these changes in mortgage lending standards, but let's get to this accountability issue. Jessica Silver-Greenberg, we've had some -- we had, as I mentioned in the intro, this big settlement with JPMorgan Chase, for $13 billion. And we now understand that other settlements are likely in the offing. Can you bring us up to date on that?

SILVER-GREENBERGAbsolutely. So what we saw in November of last year was that JPMorgan Chase and the Justice Department reached what really was a record $13 billion settlement. And it wrapped up this kind of state of state and federal investigations into the sale of mortgage-backed securities. So the investments made up of these securities that were sold from 2005 through 2008.

SILVER-GREENBERGWhen it was announced, one of the Justice Department officials who had kind of brokered, help broker the government settlement with JPMorgan Chase, said that this could offer a kind of template for other banks that are also under investigation by the same authorities for their sale of, you know, complex investments in the lead up to the financial crisis.

SILVER-GREENBERGSo, taking that, a number of bankers and their lawyers kind of did an assessment of what the banks, you know, if you looked at JPMorgan as a kind of guide, what they might pay. And they came up with a kind of potential number for each bank.

SILVER-GREENBERGAnd in total all the banks under investigation, if they pay proportionally what JPMorgan paid, at the time that this -- that the JPMorgan settlement was announced, it looked like the banks would pay in total something like $50 billion, 5-0 billion, as the kind of total industry tab, just for those -- just for the pre-financial crisis behavior. And now we see Bank of America is also in discussions to settle their mortgage investigations.

GJELTENWell, Devlin Barrett, Jessica's talking about a template here for settlements with other banks. But it's all about dollars. There's -- of course, JPMorgan admitted no wrongdoing in that settlement. And…

BARRETTWell, that's not quite right. They…

GJELTENOK.

BARRETT…made no guilty plea, but they did admit wrongdoing. But you're right, that the conversation has shifted from when the crisis began. When the crisis began, you know, there were a lot of FBI investigations, there was a lot of criminal work going on. And everyone said, you know, when are people going to start going to jail? As much as they are making progress in these big multi-billion dollar settlements, and as clear as it looks now that there will be many billions more in settlements to come, the more time elapses the further we get from the likelihood of anyone going to jail for this conduct.

BARRETTThat's not an absolute, though. For example, in the JPMorgan case, there is an outstanding criminal investigation of two individuals in particular. But it's telling that, you know, six months after that settlement the Justice Department still has not made a charging decision on that case, is my understanding. And, you know, again, the notion of criminal charges on this stuff for individuals, is really receding unless someone makes a drastically different approach within the Justice Department.

GJELTENMichael Greenberger, are you bothered by that?

GREENBERGERBothered by these settlements and the templates for the settlements? Absolutely.

GJELTENAnd the move away from going after guilty…

GREENBERGERLook, it's widely -- if you talk to any savvy federal prosecutor that deals in white collar criminal activity, the only deterrent here is putting people in jail. The $13 billion settlement that JPMorgan reached, it sounds, when it's looked out of context, to be substantial. But they took a substantial tax write-off for that settlement. And, as has been said, there's some holding out for criminal indictments, but a long time has gone by. The counterpoint here is the saving and loan scandal in the early 1980s, which was a fraction of the seriousness of the meltdown in 2008.

GREENBERGERThere were 1,000 major convictions gotten. Don't forget who was president during that time, Ronald Reagan. In this crisis, which is the second-most serious crisis since the Great Depression, and fraud is all over it -- the American public will not be convinced there was no fraud here. And they're correct in that situation. We've got one minor official at Credit Suisse who's ended up being indicted.

GJELTENWe'll get to him in a minute. Andrew Sandler, what's your explanation for the pattern here of these deals?

SANDLERWell, we are eight years beyond the financial crisis now. And while there clearly was intentional wrongdoing during this period of time by some folks, we have to remember that those entities were generally the unregulated part of the lending industry. Over time they went out of business or the regulators asked the banks to acquire some of these entities in terms of trying to get through the worst of the problems in 2008.

SANDLERSo we're now eight years later. We have to put that into context. And we have to decide, what is the priority now? Is the priority to continue to go after the issues of 2008? Or is the priority a healthy housing market, which is necessary to restart the economy? And the prosecutors are in a difficult position. They're under a lot of political pressure.

SANDLERThe places where there's knowing wrongdoing, where people knew at the time that what they were doing was wrong, most of those are out of business now. And they just need to be very, very careful that this doesn't devolve into what is essentially the blame game.

GJELTENOK. Andrew Sandler, I want you to hold that thought. We're going to be taking a short break. And when I come back I'm going to go right back to you. But we are going to take a break now. Stay tuned.

GJELTENWelcome back. I'm Tom Gjelten of NPR sitting in today for Diane Rehm. And we're talking about the role that banks played in the 2008 financial crisis and what should be done about them even now six years later, whether bankers should go to jail, whether we should move on to other reforms. My guests are Devlin Barrett who covers security and law enforcement for The Wall Street Journal, Jessica Silver-Greenberg, reporter for The New York Times. She joins us from New York.

GJELTENMichael Greenberger, founder and director of the University of Maryland Center for Health and Homeland Security and a professor at the University of Maryland Carey School of Law. Finally on the phone with us from Alabama is Andrew Sandler, chairman and executive partner of Buckley Sandler Law Firm and an attorney who has been involved in a number of cases on the defense side defending bankers.

GJELTENAnd, Andrew, I had to cut you off before I went to the break, but I want to get you to respond to what Michael Greenberger said earlier, which was that, unless bankers go to jail, there really is no significant deterrent to bad behavior in the future.

SANDLERRight. And I guess I would take question with Michael's statement, unless bankers go to jail. I think whenever you have a major crisis, it's important to identify and take action against bad actors and to do so on a timely basis. I don't think there is a lot of evidence that today's bankers in 2014 were the bad actors in 2008. And I think the notion of timely law enforcement has passed with respect to those who may have been responsible.

SANDLERThis is a very, very complicated set of issues and problems. There's no doubt that in that period of time there were lenders who made many bad loans. There were borrowers who sought loans that they really could not afford and that there were government officials who encouraged very liberal lending standards for the reason of promoting the American dream of home ownership. This is a very, very complicated set of problems.

SANDLERAnd we had an economy that blew up. Interest rates skyrocketed. People's ability to pay diminished. And so it's very simple to say, well, it's all about bad bankers, and we need to punish bad bankers. But that doesn't really dissect the problem in a fair or an appropriate way. And what we really need the banking industry to do now is focus on how do we provide access to credit to people so that they can realize the American dream of home ownership and we stimulate the economy and we move forward.

SANDLERAs long as all of this focus remains on assessing blame for the past, we're going to have a very, very difficult time accomplishing what the president and others have articulated as what we really need to do, get credit to people on fair and reasonable terms who can handle that credit.

GJELTENOK. And we're moving in that direction. Michael Greenberger, Andrew Sandler says that when you act under -- in response to political pressure on a really complicated problem -- if I oversimplify what he said -- you're asking for trouble.

GREENBERGERWell, one misimpression in Andrew Sandler's presentation is he says 2008 long time is gone. As a matter of fact, there are statute of limitations problems and prosecutions may be difficult now. But what is being missed here is the wrongdoing is ongoing as we sit here today. The Justice Department has several ongoing investigations of the banks fixing indices that are fixed in a way that profit the banks and hurt the average investor.

GREENBERGERThere's price fixing on interest rate indices, price fixing on natural gas indices, price fixing on foreign exchange. This has trillions of dollars of impact on the economy. And the problem is the Justice Department is making lots of noises. But what we're seeing and what is troubling here is the passivity in the wake of the 2008 crisis is an ongoing problem in the Department of Justice.

GJELTENJessica Silver-Greenberg, at the beginning of the program, you pointed out that the template that the Justice Department seems to be following here is really focused on cash settlements. What is going on in the Justice Department right now with respect to criminal prosecution efforts against banks?

SILVER-GREENBERGRight. So I think we have to separate the behavior and the investigations into the lead-up and into the financial crisis, those investigations from what's ongoing right now which are -- I think the Justice Department is very much -- federal prosecutors are responding. They're trying to confront this popular belief which we've heard expressed on this program that Wall Street institutions, no matter what their misdeeds, are basically so large and so endemically important to the economy that they can't be charged. And so what we've seen is this kind of (word?) criminal prosecutions.

SILVER-GREENBERGBut in two cases which are not so moving away from the residential mortgage bank security stuff, federal prosecutors are nearing criminal charges against two of the world's biggest banks. And those are Credit Suisse and BNP Paribas. Now they're for two different things. In the Credit Suisse case it's about offering tax shelters to Americans. And the other one against France's largest bank BNP Paribas is against -- is about doing business with countries like Sudan and Iran that the U.S. has blacklisted.

GJELTENNothing to do with the 2008 financial crisis.

SILVER-GREENBERGNo. This is not related to the 2008 financial crisis. But I think what it shows and what's important here is that federal prosecutors and regulators are working together to try to get around and find creative solutions to fears that really prevented them from criminally prosecuting banks.

SILVER-GREENBERGSo what we've seen is a reluctance on the part of prosecutors to seek criminal guilty pleas, in part because they believe that those pleas would trigger -- would wreak havoc on the economy because they would trigger regulators pulling -- yanking the banks' charters which, of course, could then, you know, crater the economy more broadly. So what we're seeing is in the approach to these investigations against Credit Suisse and BNP Paribas, we see them trying to work around those fears. And so that you could see criminal prosecutions in the future.

GJELTENDevlin Barrett, you wrote in a piece yesterday in The Wall Street Journal this line: "The assembly line of expectant settlement comes after years of false starts and complications as investigators repeatedly fail to find proof of any crime stemming from banks' conduct in the run-up to the financial crisis according to people involved in those investigations." Now, is that for not-for-want of effort, or is it just very hard to prove individual guilt in these cases?

BARRETTDepending on who you talk to involved in those cases you get different answers. Now what was interesting to me was when Bob Mueller ,the one-time head of the FBI, left that job. He was asked, you know, that exact question, well why haven’t you put these cases together? Why haven't you arrested people? And his basic answer, -- I'm paraphrasing, but his answer was, well it's very complicated and it's a lot more complex than any of the other financial problems we've addressed before, we've tackled before, whether you're talking about the accounting frauds of 2002 or the S & L cases of the '80s.

BARRETTHis argument was that these things are so complicated and there's so much bad conduct spread across so many people that it's difficult to put an individual case together for criminal wrongdoing. I think one of the oddities of this conversation generally has become that we've gotten in the situation where the government basically says, on a criminal level, we couldn't find the goods. We couldn't find a smoking gun.

BARRETTAnd no one in the government has really explained that in any detail. And I think frankly the government created the expectation that there would be. If you think back to right after the collapse, Mueller went before congress month after month after month and said, we have 800 open cases involving dozens of major financial institutions. And it's sort of -- it was a throwback to the way the FBI used to work in the '50s where they just recite their number of stolen car cases to prove they were doing good work.

BARRETTBut no one ever came back and said actually, we hate to report this. We really haven't found anything that good. And I think the government, in its own way, created the expectation that they were going to arrest people. And then when they didn't, they kind of went silent on the subject.

GJELTENBut Atty. Gen. Eric Holder told you in an interview that he still hopes to make some progress in this area before...

BARRETTRight. And he's talking most specifically about the issue of civil settlements to resolve these big issues with the big banks. But having said that there is still this possibility -- and frankly I think it gets a little slimmer week by week -- that they will finally get around to charging some individuals. But, you know, I mean, we've gone from a point where it seemed a given that people would be arrested and charged at major institutions and people with real positions of power. And it's now, you know, in the category I'd say of, you know, slim to none for most of these places.

GJELTENWell, Andrew Sandler, I want to give you a quick chance here to offer your explanation for why no one has been -- with the exception of this one trader who went to jail a few months ago, why it has been so hard to find proof of any crime stemming from banks' conduct.

SANDLERWell, let's begin with the concept that I think Jessica was talking about, if we may, of criminal action against banks. And if you think about the way the Justice Department has generally dealt with criminal prosecution of companies, the overall view has been people commit crimes, not companies except in the rarest of circumstances. And the reason for that is a company, whether a bank or any other entity, what is the company? The company is the amalgam of all of its employees, all of its shareholders. And the consequences of an enforcement action affects everybody who's associated with the company across the board.

SANDLERIn the case of regulated financial institutions, there are other issues, as Jessica noted, involving losing charters potentially or other ways that the ongoing ability of the entity dysfunction can really be impacted. And so now, what about individuals, Tom, your question, and why haven't there been? Criminal prosecution is appropriate when there's evidence of intentional misconduct.

SANDLERAnd it's a high legal burden and standard. And there may well be, in some of the current issues that are out there, that they will be able to find and address those issues through criminal process. And I think it's too early to reach a conclusion as to whether there will be prosecution of individuals on some of the new investigations that Jessica mentioned.

GJELTENOK. Andrew Sandler is chairman and executive partner of Buckley Sandler Law Firm. I'm Tom Gjelten. You're listening to "The Diane Rehm Show." Excuse me for interrupting you, Andrew. But you say it's too early, but you're expecting your -- or holding out the possibility that something might yet happen obviously.

SANDLERCorrect.

GJELTENRight. So, Michael Greenberger, you mentioned earlier that some of the most aggressive prosecutions of financial institutions took place in the Reagan Administration and also in the early -- first term of the George Bush Administration.

GREENBERGERYes.

GJELTENWe saw some pretty aggressive prosecutions as well.

GREENBERGERYes. And I think there's a conundrum here that underlies this discussion that needs to be revealed. The Justice Department has viewed this as going after the institution and not the individuals who committed the fraud. And that's why you get, oh, this is complex because if we indict and convict a big institution, they may lose their charter.

GREENBERGERMany former prosecutors, prosecutors' judges have said, you don't look at the institution. That's what Andrew Sandler is saying. You look at the individual officers and what have they done. And this conundrum where Eric Holder says -- he's changed his tune now but at one point said, oh this is troubling. If we indict these people they may lose their charter and the whole economy will crater.

GREENBERGERAs Judge Rakoff said in an essay in The New York Review of Books, don't look at the institution. It's the officers who have committed the crime here. And if you indict the officers the chances of losing a charter or anything else are not substantial. And I would say further, it may be too late now, but going back to the 2008 crisis, if some of those officers had been indicted, the stock price of the underlying companies would've gone up because of the heavy incompetence of these people.

GREENBERGERFinally, evidence is hard to find. Look at the documentary Inside Job which won an Academy Award going into the causes of the meltdown. Whistleblower after whistleblower presented in that documentary evidence of fraud. One whistleblower said, you know one of the chief problems here is these junk mortgages got triple A rated by credit rating agencies. He said, if you'd put a cow in front of the credit rating agencies, they would've given it a triple A rating.

GREENBERGERAnd the American public understands this, and the dissatisfaction is in the Tea Party. It's in MoveOn.org. It's across the American populace. The banks are in better shape today than they've ever been in and the American economy is flat on its back and no one's been held accountable.

GJELTENJessica Silver-Greenberger, (sic) finish the story that Michael started to tell here. What explains the retreat in the prosecution of financial institutions that was evident in the early years of the Reagan Administration as compared to today?

SILVER-GREENBERGWell, I think that -- again, I think we're talking -- I mean, a little bit of the difficulty in this conversation is that we're talking about a lot of different areas of investigation, a lot of different areas that the Justice Department has tried with varying effect -- with varying success to hold people accountable. So, you know, if we're talking about the 2008 financial crisis we have seen them, you know, largely back off of individual prosecutions.

SILVER-GREENBERGYou had, you know, the Justice Department with Goldman Sachs said there was -- I think at the time they said -- this was in August of 2012, that there was not -- quote "not a viable basis to bring a criminal prosecution against Goldman Sachs" or its employees at the time. Even after the congressional committee had, you know, asked prosecutors to examine if the bank had been involved with any kind of illegal fraudulent acts related to several mortgage deals. So we saw them back off from that.

SILVER-GREENBERGWe also saw them back off, you know, their fraud probe of Lehman. We saw the case against Mozilo. Federal prosecutors in Los Angeles dropped that criminal investigation against Mozilo, the former chief of Countrywide Financial because, you know, there were a number of different reasons and justifications given at that time.

SILVER-GREENBERGBut if we're moving forward, if we're moving forward from those cases and we're looking at what the Justice Department is doing right now in terms of -- because I do think, as Devlin said and as Andrew said and as Michael said, it's going to be -- I would be shocked if there is a criminal case brought against an individual related to the 2008 financial crisis.

GJELTENOK.

SILVER-GREENBERGBut I think we need to look at what's going on now.

GJELTENAll right. Jessica Silver-Greenberger (sic) -- Greenberg, sorry, is reporter for The New York Times. We're going to take a short break right now. And when we come back we're going to go straight to the phones and bring you all into this conversation. I'm Tom Gjelten. Stay listening.

GJELTENWelcome back. I'm Tom Gjelten of NPR sitting in today for Diane Rehm. And we're discussing efforts to hold banks accountable or not accountable for what happened during the financial crisis of 2008. My guests are Devlin Barrett of The Wall Street Journal, Jessica Silver-Greenberg from The New York Times, Michael Greenberger from the University of Maryland where he's a law professor, and Andrew Sandler who's an attorney at the -- and chairman and executive partner of Buckler (sic) Sandler law firm.

GJELTENWe have a number, as you can imagine, a number of callers and emailers this -- today. Tom Moore from Fort Worth, Texas says, "Do your guests understand the depth and level of anger and disgust in the American people over the simple fact that only one person has gone to jail for intentionally sabotaging the American economy simply to make money?" That's a pretty strong statement. I'm going to let you respond to that in a minute, Andrew. But first, I want to bring in Richard who's on the line from Houston, Texas. Hello, Richard. Thanks for calling "The Diane Rehm Show."

RICHARDThank you very much for taking my call. The smoking gun is not on Wall Street. The smoking gun is on Main Street. I want to direct everybody to the Fifth Court of Appeals. It's a Fifth Circuit Court of Appeals in New Orleans, case number 12-20806. There's documented evidence of document fraud, of breach of contract, of violating the Texas constitution. I go on and on. But what's interesting in this case is the circuit judges rewrote the facts for the banks and ruled for the banks on facts that don't exist, so now they're going to Supreme Court...

GJELTENMm hmm.

RICHARD...for things that don't exist. The corruption is not just in Wall Street. It's also in the said circuit. I would like your comment.

GJELTENAnd are you a litigant in this case?

RICHARDYes, I am. It is our home. And it started with, believe it or not, a home mortgage note of $1243 a month. Well, out of the blue, on a fixed rate mortgage, they wanted $2987 per month.

GJELTENOK. Well, Andrew Sandler, you heard the anger in Richard's voice. You heard the anger in that email that I read. You certainly understand that people are very upset that the United States, the American nation, the American people have suffered so much over the last six years, and only one person, a relatively low-level trader in Credit Suisse, is actually in jail.

SANDLERYeah. I completely understand the frustration and the desire to figure out who's responsible and to punish them. The problem -- and it's not going to make people feel better who have had devastating consequences. But the problem is the answer is our entire system was broken. It broke down. There were lenders who did not do their jobs the right way. The government regulators did not do their job the right way and were asleep at the switch during the period of time.

SANDLERWhile many borrowers were misled or misunderstood and were hurt by this, others took loans they really should not have taken. Our entire system was broken. And what we need to do now to make sure that doesn't happen again is establish the right set of rules and responsibilities, vigorously enforce those rules and responsibilities, and make sure that they don't reflect such an overreaction to what happened before.

SANDLERWe can't set new rules to solve the last problem. We have to set new rules to prevent the next problem. And we have to do so in a way that prevents the entire system from breaking down the way it did with leaving many, many victims in its wake while, at the same time, not doing things that are going to make it impossible for people who need credit to get credit.

GJELTENOK. Right. OK. Michael Greenberger, let's try and find some common ground here between you and Andrew Sandler. He says part of the problem here is regulators who were asleep at the switch. How do you -- do you agree with that? And how do you explain that phenomenon?

GREENBERGERWell, you know, the basic financial instrument that caused the meltdown, which were swaps contracts...

GJELTENMm hmm.

GREENBERGER...were deregulated with the support in 2000 of President Clinton, Secretary of the Treasury Larry Summers, federal chair Alan Greenspan, and the list -- and Phil Graham, who was then chairman of the Senate banking committee, these instruments were totally put outside the boundaries of legal culpability. So there is something to what Andrew Sandler says. On the other hand, there -- in 2009, Congress passed a fraud statute making it easier for the United States to prove fraud.

GREENBERGERAnd you can say this is all new stuff, but this is classic fraud. People were told things, relied on it, and it wasn't true. The prior -- Lanny Breuer, who's the assistant attorney general, the criminal division, and who a lot of blame has been heaped on for the laxity in the Department of Justice, said, well, the problem here was there were all these sophisticated people dealing with each other.

GJELTENMm hmm.

GREENBERGERNobody could have been defrauded. And as Judge Rakoff of the Southern District of New York put in his essay in The New York Review of Books, it's not whether the person that was defrauded was another sophisticated investor. Was the market defrauded? Did it cause the market to be destabilized? That is true. And it is not only true for what happened in 2008. We have ongoing criminal conduct by these banks. And as many of the people have said here, there is skepticism...

GJELTENMm hmm.

GREENBERGER...as to whether the Justice Department, even with new open and shut criminal cases, will go after the wrongdoers.

GJELTENExactly. Let's go now to caller four. Andrea, who is on the line from Morehead City, N.C.

ANDREAYes, sir. I'm here.

GJELTENHello.

ANDREAHello.

GJELTENYes. Thanks for calling "The Diane Rehm Show."

ANDREAIt's kind of heavy. I wish you would kind of direct me. There's so much going on here, you know.

GJELTENDo you have something to add to the conversation?

ANDREAYes. I do, but I'm just really -- it's heavy. OK. We won a property dispute between personal property, which is our home, and real property, which is the land. And I caused gripes from Capitol Hill. Elizabeth Warren said on the 18th of April, representing the Consumer Finance Protection Agency, she said -- she said. I didn't say it. I wrote it down. I quoted it 'cause that's what I did -- that the Treasury shoveled money out to the banks with no strings attached, with no accountability. They shoveled money out in 2008 with no strings attached.

ANDREAAnd then what she has done is, representing the Consumer Finance Protection Agency, which regulates the National Regulatory Commission, nobody in America got rich on their own. She shared -- I wrote this all down. This is "Diane Rehm Show." I wrote it all down 'cause I listen to you guys all the time. Three billion dollars were returned to consumers. Three billion dollars were returned to consumers because the corporations were not going to be held accountable. So I'm going to go back to what I think the message is...

GJELTENOK.

ANDREA...is that the banks should be held accountable...

GJELTENRight.

ANDREA...because small businesses -- small businesses and the fraudulent loans or the not -- I'll just say not -- they're not rightly managed loans, then it takes two to do that.

GJELTENRight. OK.

ANDREAOK. That's it. I mean, I hope that's OK with you.

GJELTENAll right. Thank you very much, Andrea. Jessica Silver-Greenberg, do you want to bring us up to date on what Elizabeth Warren has been saying and getting so much attention for in her analysis of this situation?

SILVER-GREENBERGSure. Well, but before I do, I actually wanted to -- I think this helps address in a little bit what the callers have said, some of the rage. If we're looking at how the Justice Department and government authorities are trying to hold banks accountable, I think we have to look at how the settlement money that is part of -- so the consumer relief that is part of all these settlements.

SILVER-GREENBERGSo if we only see these multi-billion dollar settlements, I think we need to really analyze how that relief -- what banks are getting credit for it, and how that relief is being passed out, how it's being structured to help homeowners because that's really what we're talking about now. I mean, you still have a lot of people that are struggling just to make their monthly payments that have seen the value of their homes drop precipitously since the financial crisis.

SILVER-GREENBERGAnd if you look at, say, the $25 billion settlement that the banks reached over the mortgage servicing violations, you can see that the consumer relief, that of that landmark kind of $25 billion, which was all about foreclosure abuses, much of that consumer reliefs gives banks credit for things that they were doing already. And only about a little more than half of that total number of that $17 billion designated for borrowers has to be used to reduce principals for borrowers who owe more on their mortgages than their homes are worth.

SILVER-GREENBERGSo I think that we kind of have to start shifting the conversation, I believe, to look at whether or not, if this is the only relief -- I'm not saying that it should be. But if we're looking at, you know, this small part of the pie, how is it being distributed? And is it translating into people actually being able to save their homes? I think that's an important question, and it's some of what Elizabeth Warren is talking about, too.

GJELTENAndrew Sandler, this is a point that you've been making, that you really need to have a forward focus here.

SANDLERYes. Absolutely. And I could not agree more with all of Jessica's observations. I would note also that the Consumer Financial Protection Bureau was raised by the caller and by Jessica, and there is -- while I've got many disagreements with that agency and the bureau and the way it's operating in some respects, the premise of the bureau was to level the playing field between regulated financial institutions that were subject to regulation, holding aside whether it was done well during that period of time, and the unregulated independent financial institutions, financial services companies, that were not regulated.

SANDLERAnd the bureau -- one of the fixes, one of the lessons learned from the last crisis was to try to set up a regulatory structure where the place where the problem really arose in 2008, the independent mortgage companies, where there's now a regulator that can effectively address what they're doing. So these are the kinds of things that are being done, you know, not perfectly but constructively to try to move the ball forward.

GJELTENOK.

SANDLERAnd, you know, as much as the pain and suffering from the prior period is something everybody really wants to address, we can't fix that, other than by getting some of this money to those who were harmed. What we can do is create a better system where people can get credit but where we can protect them from getting the wrong kind of credit that ultimately could hurt them in a way that others were hurt in the past.

GJELTENAndrew Sandler is an attorney who has represented banks. I'm Tom Gjelten. You're listening to "The Diane Rehm Show." And let's go now to Sahrai (sp?) who's on the line from Baltimore, Md. Hello, Sahrai. Thanks for calling "The Diane Rehm Show."

SAHRAIHow are you? I have a novel suggestion. And I hear a lot of blame going around but not a lot of interesting ways of solving the problem. We have something like a trillion dollars -- or we have a few more than a trillion -- I don't know the deficit. And all of these conservative congressman (unintelligible) of jumping up and down, saying we have to fix this. Well, we've got a financial system with people who are really good with money.

SAHRAIThey're really good because they made billions of dollars in one way or another. Why not have them do community service (unintelligible) and fix the deficit? If you want to hold them responsible, make them fix the problem. Subscript them like you would into an army or a nationalized industry, however you want to do it, but those people who made the problem should then do their community service as if they were -- I don't know (unintelligible) on the street who is doing 30 hours of community service while pushing a (word?).

GJELTENAll right. Well, first you have to find individuals guilty of having committed a crime. And I think what the -- what we have learned...

SAHRAIBut the -- no, but you could make that as part of the settlement. Instead of charging them money, have them do the time as a compensation package to the American people.

GJELTENBut the individuals have not been -- had to pay fines. It's been the banks that have had to pay fines. There is, of course, Devlin, one banker who has gone to jail. It was a banker for Credit Suisse, and he actually admitted that he had done wrong.

BARRETTYes.

GJELTENWhy don't you tell us his story?

BARRETTWell, his story is that he was essentially -- I don't want to say a low level person, but he was, let's say, middle management. And they focused on him and looked at him. And he chose to plead guilty. I mean, I think one of the interesting questions about his case is, did he make a tactical mistake in choosing to plead guilty? I think at the time that he did it, there was a much greater expectation that all sorts of people were going to be charged. And that failed to materialize.

BARRETTYou know, one of the things I think is sort of very true in this dynamic is there's an old saying in courthouses that if you're talking about the defendant, the defendant is losing. If you're talking about what the government did, the defendant is winning. And I think, in all this conversation, what you see is you're really talking about what the government did and didn't do, specifically in terms of prosecutions and cases.

BARRETTAnd I think that just speaks to how the government has lost the public opinion argument on this. And you can see it in the -- I mean, there's just -- people are desperate for some sort of solution that they've -- that would provide something that they feel is justice. And I -- it would be an interesting test from the caller's point of view, how much would a bank pay to not have to make their individual member do a community service? My guess is it would be a lot. But we'll probably never know.

GJELTENWell, one issue that we haven't really talked about here is whether banks are people, whether, like corporations, they can be considered people and whether they could even be hit so hard, Michael Greenberger, that they could be subject to the death penalty, in a sense that the settlement could be so punitive that it puts them out of business.

GREENBERGERWell, you know, this worry about the death penalty for the banks has been the controlling handcuffs on the Justice Department that they've been worried that somehow they'll disable the banks and hurt the economy. The remedy here is not complicated. In the Reagan Administration, they knew what the remedy was, indictments for criminal fraud. Because that's not being done, you get the frustration of the American public searching for remedies, like make them do community service.

GREENBERGERWe've gotten so far off the traditional remedy for crime, which in this environment is impunity, that the American public is struggling. Elizabeth Warren has the pulse of the American public. Not only is she upset about how the American public has been treated vis-à-vis the banks, but she's the foremost critic of the Justice Department for its laxity in commonsense prosecution.

GJELTENWell, we'll see how this plays out in the midterm elections and in the presidential elections in 2016. Obviously, it's an issue that's not going to go away. I want to thank our guests today, Devlin Barrett, a reporter for The Wall Street Journal, where he covers security and law enforcement. Jessica Silver-Greenberg is a reporter for The New York Times.

GJELTENAlso, we've had Michael Greenberger, founder and director of the University of Maryland Center for Health and Homeland Security, and a professor at the University of Maryland Carey School of Law. And, finally, Andrew Sandler, chairman and executive partner of Buckler (sic) Sandler law firm. I'd like to thank all my guests. Thanks to you all for listening. I'm Tom Gjelten sitting in for Diane Rehm.