Elizabeth Warren isn't running for president. But she does have an agenda for reining in the big banks that would go well beyond the Obama administration's (underrated) bank regulation moves and substantially alter the role of Wall Street in American life.

In a speech delivered on April 15 at the Levy Institute's 24th annual Hyman Minsky conference, Warren laid out the most comprehensive and ambitious version of her agenda yet.

Naturally, the bulk of her policies would require new acts of Congress. Given Congress's declining productivity and Republicans' extreme hostility to new regulatory initiatives, none of that is likely to happen unless something dramatically changes in American politics to make a Democratic House of Representatives plausible. But a crucial element of Warren's agenda could be unilaterally implemented by the next president — or even this one.

An agenda a president can deliver — bring back prosecutions

The circumstances of congressional gridlock make policy ideas a president can implement on her own valuable these days, especially for Democrats. That's why the most important aspect of Warren's agenda is the part that doesn't involve legislative changes but just new direction to executive branch officials, especially at the Department of Justice. She wants to see the federal government level criminal charges against financial institutions that break the rules.

"The Department of Justice doesn’t take big financial institutions to trial — ever," she says in her speech. "Even when financial institutions engage in blatantly criminal activity."

What happens instead is that the DOJ builds elements of a case and then almost always reaches a deferred prosecution agreement, a form of settlement out of court that's a bit like a plea bargain except without an actual prosecution or guilty plea. The amounts of money involved in these settlements can be eye-popping — Bank of America paid a $17 billion fine not too long ago — but banks only agree to them because they are survivable.

Warren says these deals "were originally created to deal with low-level, nonviolent individual offenders" but have now "transformed beyond recognition to create get-out-of-jail-free cards for the biggest corporations in the world."

She proposes a number of efforts to increase enforcement, including critical remarks in the direction of the Securities and Exchange Commission, but the biggest idea here is a "two strikes and you're out" policy for the Justice Department.

"No firm should be allowed to enter into a deferred prosecution or nonprosecution agreement if it is already operating under such an agreement — period," she says.

A corporate death sentence

In typical Warren fashion, she lays out this idea like folksy common sense. But to understand what a powerful weapon this could be, you have to understand why officials in both the Bush and Obama administrations haven't used it against big banks.

Reporting on the Justice Department's thinking from Jim Zarroli at NPR, Jesse Eisinger at ProPublica, Andrew Ross Sorkin at the New York Times, and others comes back to a single name: Arthur Andersen.

Arthur Andersen was one of the "big five" major accounting companies in America, until it was found to have been deeply complicit in Enron's financial shenanigans. The federal government took the company to court and won a conviction. But companies don't do jail time and then come out on parole. What happened instead is that the company swiftly and spectacularly collapsed — clients and suppliers don't want to work with a company that they think may go out of business soon, and that becomes a self-fulfilling prophecy. As Eisinger writes, "Within months, the firm closed down, costing tens of thousands of people their jobs," and the verdict "resulted not in more boldness but in more caution on the part of federal prosecutors."

Andersen's practices were sold off to the other big accounting firms, reducing competition in the industry, and the whole thing looked terrible when a 2005 Supreme Court ruling overturned the conviction. But unlike a convict serving jail time — even on death row — there was nobody left to free. Andersen, as a player in the industry, had been dead for years by the time its conviction was overturned.

This experience altered the Justice Department's approach to big-time white-collar crime in two ways. On the one hand, it made prosecutors leery of overreach. On the other hand, it confirmed to them that their leverage in extracting financial concessions was pretty enormous. A big fine and a nice headline were both easier and less risky than going for a conviction.

Warren wants an end to impunity

To Warren, this corporate sob story doesn't hold much water.

"When small banks break the law, their regulators do not hesitate to shut down the banks, toss their executives in jail, and put their employees out of work," she says. In supporting documentation for her speech provided by staff, her team cites as an example the case of the former Freedom Bank in Oklahoma, which was shuttered by the FDIC and then had its vice president prosecuted and jailed for making false statements about the bank's financial health. Executives at California's failed United Commercial Bank have also faced criminal charges.

Should big banks really get a free pass? It's true that the stakes are higher in shutting one down, but the stakes are higher in their misconduct, as well.

"It’s time to stop recidivism in financial crimes and to end the 'slap on the wrist' culture that exists at the Justice Department and the SEC," Warren says.

The Democratic divide on banking

In throwing down the gauntlet this way, Warren continues to expose a significant divergence of opinion among leading Democrats about Wall Street and finance's role in American life.

To the Obama administration, the financial crisis of 2008 and '09 showed the need to improve regulation of the banking sector in order to make a new crisis less likely. The White House believes, rightly, that its legislative agenda has accomplished a great deal on this score. Beyond that, Obama thinks that rich bankers — like rich people in general — should pay more taxes, and help finance useful programs for people in the bottom half of the income distribution.

Warren has a much more far-reaching critique of banks' role in American politics and economics. From Obama's point of view, deferred prosecution agreements are a prudent way to manage a risky situation. From Warren's point of view, the idea of banks that are simultaneously so vulnerable to collapse and so integral to the ongoing operation of the economy that the government dare not prosecute them is the essence of the problem. And the broad nature of the discretion afforded to federal prosecutors and their bosses means that criminal prosecutions are a potentially powerful tool for any president who cares to use them.

As a senator from New York, Clinton naturally tended to be friendly with the hometown industry. But she has, thus far, been silent on banking issues in her emerging economic agenda. It seems unlikely that she will choose to break with Obama on this topic, but if she does, she has laid out a road map for decisive transformation that doesn't require congressional approval.