Yesterday, the New York Daily News published an interview transcript of its interview with Bernie Sanders. Here it is.
The interview was illuminating in many ways. It provided me with some comfort and some discomfort.
Good news first: It appears that Bernie will campaign for Hillary if she is the nominee and try to get his many supporters to support her. Here’s the relevant excerpt:
“Sanders: What I am concerned about, what I think would be a disaster for the United States of America, is to see a Donald Trump or some right wing Republican become President of the United States. I will do everything I can to prevent that from happening.”
Throughout the interview, I thought that Bernie did a very good job of staying away from personal attacks on Hillary and was respectful. I wish his surrogates and supporters would do the same.
One of the things I found most discomfiting about the interview was Bernie’s lack of knowledge about the “illegal behavior on Wall Street.” When pressed, he couldn’t identify a particular law that anybody allegedly broke despite one of the pillars of his campaign being that Wall Street is full of criminals who need to be punished. He is campaigning to be the head of the executive branch of the United States, the person ultimately in charge of enforcing federal law, and he doesn’t know how these alleged criminals broke the law? If he hasn’t looked into the facts or the relevant laws, isn’t a little bit reckless to call people criminals? Is he just going to tell his Attorney General to indict everybody at a big bank or other financial institution?
Bernie does mention fraudulent activity:
“Sanders: Let me be very clear about this. Alright? Let me repeat what I have said. Maybe you’ve got a quote there. I do believe that, to a significant degree, the business model of Wall Street is fraud. …
What kind of fraudulent activity? Fraudulent activity that brought this country into the worst economic decline in its history by selling packages of fraudulent, fraudulent, worthless subprime mortgages. How’s that for a start?
Selling products to people who you knew could not repay them. Lying to people without allowing them to know that in a year, their interest rates would be off the charts. They would not repay that. Bundling these things. Putting them into packages with good mortgages. That’s fraudulent activity.”
One issue with fraud is that it is often difficult to prove an intent to defraud (even by a preponderance of the evidence (civil cases) and more so beyond a reasonable doubt (criminal cases)) so it would be difficult to just indict all of the executives at a big institution and successfully prosecute them for fraud. What did each executive know? What was disclosed to borrowers getting a mortgage (probably a lot, even if it was in a long, difficult-to-read document)? What was disclosed to the institution’s investors (probably a lot; if you have ever read an SEC filing you’ll know what I mean; I’d guess Bernie has not)?
It’s really easy to sit on the sidelines and say everyone should be in jail. It’s a lot harder to build a case that will bring a criminal conviction. Two Bear Sterns managers were acquitted in 2009 on all criminal securities fraud charges they faced, despite what the prosecutors claimed was a clear case of Wall Street crime, including smoking-gun emails. Also, pointing to a civil settlement as evidence that a criminal conviction could have been achieved (as Sanders does: “All I can tell you is that if you have Goldman Sachs paying a settlement fee of $5 billion, other banks paying a larger fee, I think most Americans think, “Well, why do they pay $5 billion?” Not because they’re heck of a nice guys who want to pay $5 billion. Something was wrong there. And if something was wrong, I think they were illegal activities“), overlooks the significant differences between civil and criminal burdens of proof and the willingness of companies and individuals to settle civil cases (where settlement amounts often will be paid by insurance) versus pleading guilty to a crime (which, perhaps obviously, has much more severe implications for one’s finances and freedom). Note that the two Bear Sterns managers settled a civil case brought by the SEC AFTER they were found not guilty on the criminal charges.
Was there criminal activity that led to the subprime meltdown and rescission? I’m sure there was, but as someone who has read a lot of internal documents from big companies during that time, I also know it’s very difficult to find evidence of behavior that would lead to individual civil liability, let along criminal liability.
I’ve read some defenses of Bernie that he shouldn’t need to know the particular statute(s) that was violated because he’s not a lawyer. No, he’s not a lawyer. But his job is (and has been for decades) to enact the laws that lawyers use to prosecute criminals, including, obviously, white collar criminals and big bank fraudsters.
If he doesn’t know which statute, it any, was violated during the last rescission, how would he know if the statute needs to be amended to make it easier to bring criminal cases in the future? What if there isn’t a statute that covers the activity that he believes is “destroying the fabric of our nation”?
If he so badly wants to cut down on corporate greed why doesn’t he propose a bill that would make the financial industry much easier to commit and prove in court, like other industries? For example, the Federal Food Drug and Cosmetics Act does not have a mens rea (mental state) requirement for many of its crimes. The health and safety of food, medicine, and other things (such as medical devices) is deemed so important that executives can be criminally liable even if they did not have knowledge of a particular act if the executive had the responsibility and authority to correct the violation (Here’s a useful article on the responsible corporate officer doctrine). Bernie could introduce legislation that would do similar things for financial malfeasance and the banking industry (just after the subprime meltdown and when the Democrats had a majority in Congress might have been a good time).
The fact that Bernie does not seem to know much about white collar criminal law would not be nearly so disappointing if he didn’t call white collar workers criminals so often. The lack of knowledge about this (and presumably many other issues) makes one wonder if he has any idea about how he would accomplish any of his agenda even if he does get elected and the Democrats retake majorities in the House and Senate, each of which is a long shot.
To end on a more optimistic note, I actually thought his foreign policy discussion was better and more nuanced than I expected, though I do wonder if he would have been as knowledgeable about any dispute other than Israel-Palestine. I think his opinion on settlements is wise, even if it would clash mightily with Netanyahu’s administration:
“Daily News: Okay. You’ve called not just for a halting construction of so-called settlements on the West Bank, but you’ve also called for pulling back settlements, just as Israel did in Gaza. Describe the pullback that you have in mind.
Sanders: Well, that’s the Israeli government’s plan, but I think that right now…I’m not going to run the Israeli government. I’ve got enough problems trying to be a United States senator or maybe President of the United States.
Daily News: No, but if you are President, you will, I assume, become deeply enmeshed in attempting the peace process.
Sanders: I assume that’s something…
Daily News: And where you start on the negotiations is important.
Sanders: Here’s the main point that I want to make. I lived in Israel. I have family in Israel. I believe 100% not only in Israel’s right to exist, a right to exist in peace and security without having to face terrorist attacks. But from the United States’ point of view, I think, long-term, we cannot ignore the reality that you have large numbers of Palestinians who are suffering now, poverty rate off the charts, unemployment off the charts, Gaza remaining a destroyed area. And I think that for long-term peace in that region, and God knows nobody has been successful in that for 60 years, but there are good people on both sides, and Israel is not, cannot, just simply expand when it wants to expand with new settlements. So I think the United States has got to help work with the Palestinian people as well. I think that is the path toward peace.
Daily News: I was talking about something different, though. Expanding settlements is one thing; coming into office as a President who said as a baseline that you want Israel to pull back settlements, that changes the dynamic in the negotiations, and I’m wondering how far and what you want Israel to do in terms of pulling back.
Sanders: Well, again, you’re asking me a very fair question, and if I had some paper in front of me, I would give you a better answer. But I think if the expansion was illegal, moving into territory that was not their territory, I think withdrawal from those territories is appropriate.
Daily News: And who makes the call about illegality, in your mind?
Sanders: Well, I think that’s based on previous treaties and ideas. I happen to think that those expansions were illegal.
Daily News: Okay, so if we were to find Israeli settlements, so-called settlements, in places that has been designated to be illegal, you would expect Israel to be pulling them back?
Sanders: Israel will make their own decisions. They are a government, an independent nation. But to the degree that they want us to have a positive relationship, I think they’re going to have to improve their relationship with the Palestinians.
Daily News: Okay, but I’m just talking about, you’d be getting involved in the negotiations, and this would be setting a benchmark for the negotiations that you would enter the talks, if you do, having conveyed to both parties, including the Palestinians, that there’s a condition here that you want Israel to remove what you described as “illegal settlements.” That’s going to be the baseline. Now, if you’re really…
Sanders: Well, there’s going to be a lot of things on the baselines. There are going to be demands being made of the Palestinian folks as well. When you sit down and negotiate, obviously…
Daily News: And what are those demands?
Sanders: Well, for a start, the absolute condemnation of all terrorist attacks. The idea that in Gaza there were buildings being used to construct missiles and bombs and tunnels, that is not where foreign aid should go. Foreign aid should go to housing and schools, not the development of bombs and missiles.“