09/04/2012 08:45 am ET Updated Nov 04, 2012

Mr. Vice President: Please Don't Say All Americans Play By the Same Set of Rules. They Don't.

This Thursday, Joe Biden (my former boss and the long-time Chairman of the Senate Judiciary Committee) and then Barack Obama will present their vision for a second term. They'll do it from Charlotte, North Carolina, where Bank of America has its headquarters. They'll both likely say that they believe in an America where everyone plays by the same set of rules. The same-set-of-rules line was in the President's most recent State of the Union address and has been a consistent campaign theme. In April, the Vice President said: "We're not supposed to have a system with one set of rules for the wealthy and one set of rules for everyone else."

We're not supposed to. But now we do. After the Savings & Loan crisis of the late 1980s, hundreds of S&L executives were jugged. In February 2009, before a Senate committee, then deputy FBI Director John Pistole testified that the fraud in the financial crisis "dwarfs" that of the S&L crisis. Yet the Obama Justice Department didn't indict a single Wall Street executive.

Maybe there's no law of correlation between financial crises and fraud. The S&L crisis was big (and there were lots of fraud prosecutions of senior S&L executives); the financial crisis was bigger (ergo there ought to have been more fraud prosecutions of Wall Street executives). But the report by the Lehman Brothers' bankruptcy examiner and the Senate Permanent Subcommittee of Investigations report on Washington Mutual strongly suggest that when competent, independent fact finders look at what took place in the financial crisis, they find substantial evidence of (unprosecuted) fraud.

Yet Attorney General Eric Holder, in a February 2012 speech at Columbia University, asserted that the administration's "record of success has been nothing less than historic" and that in the last two years the department had indicted more than 2,100 people for mortgage fraud. Trumpeting prison sentences for small-fry mortgage brokers ignores the central question: Did the Justice Department make a timely, purposeful and concerted effort to investigate Wall Street executives? The President essentially admitted that the answer is no: in the same State of the Union address, he announced the appointment of a second task force to investigate Wall Street crimes. Too little, too late.

The truth is, after 9/11 we shifted law enforcement resources from white-collar crime to antiterrorism, leaving us vulnerable to a fraud attack and unequipped to investigate the origins of the financial crisis. We're doing it again as the FBI increasingly makes cyber crime its top priority. Inside the Beltway, entire industries have grown up to profit from and lobby for more federal dollars to counter these existential threats to America. In Washington, only the Wall Street lobby is concerned about fraud investigations. And their concern is to prevent them.

Another truth is that bank regulators were often at the scene of the crime. They not only failed to stop Wall Street fraud, their knowledge of it effectively immunizes potential defendants, who can claim in their defense that government officials knew what was happening. This attitude, in which laissez-faire becomes laissez-frauder, starts at the very top. Federal Reserve Chairman Ben Bernanke and Treasury Secretary Tim Geithner knew years ago about potentially criminal bank behavior in the LIBOR scandal. Their response was to do next to nothing.

Finally, in early 2009, the White House, Treasury Department and Federal Reserve were deeply concerned about the fragility of the international financial system. The Justice Department apparently interpreted this concern as an injunction: don't put any bankers in the brig until we right our financial ship. When Senator Ted Kaufman and I met with senior Justice Department officials in September 2009, more than eight months into the administration, it was obvious the department's response had been passive, desultory, and decentralized, when it should've been aggressive, systematic and creative.

Predictably, Mitt Romney won't turn to President Obama during a debate and say, "Your administration failed to hold Wall Street accountable. If I'm elected president, my administration will prosecute the powerful when they break the law." That's because, when it comes to Wall Street, we don't have a two-party system. We have an ongoing Wall Street contribution party, a cash bash that benefits Democrats and Republicans. This has two consequences: neither party can creditably attack the other as too pro-Wall Street, and neither party is inclined to address the lawlessness in our financial markets.

Regardless, this administration's inaction is unconscionable and a stain on the American justice system. During a second term, the administration should work to erase this stain by appointing a new set of tough and determined regulators. But why would they? You're right, Mr. Vice President; we're not supposed to have one set of rules for the wealthy and one for everyone else. I just wish you and President Obama would do something about it.