Mark D. White
Many people, including in the media and academia, have wondered about the lack of criminal prosecutions stemming from the 2007-08 financial meltdown, especially related to fraud in the banking sector. In the new issue of Crime, Law and Social Change (61/1, February 2014), Henry N. Pontell, William K. Black, and Gilbert Geis probe this question in a paper titled "Too big to fail, too powerful to jail? On the absence of criminal prosecutions after the 2008 financial meltdown":
Various explanations have been offered regarding the causes of the current global economic crisis that was spawned by the collapse of mortgage-based securities in the U.S. that were sold world-wide and that contained "toxic assets" comprised of subprime loans. There is ample evidence that such loans were originated through fraud. Firms recorded huge profits, and executives were awarded large bonuses even though some had led their companies into bankruptcy and plunged both the U.S. and global economies into the greatest recession since the Great Depression. This paper assesses the reasons why there have been no major prosecutions to date, and compares the U.S. government's response to that in the savings and loan crisis. It analyzes the influence of large financial institutions on lawmaking, regulation, and the allocation of enforcement resources, the continued general lack of understanding of financial fraud including control fraud, and problems related to the higher status and power of potential defendants.
This paper promises to contribute a much-needed criminological insight to this question (which seems to bring out a retributivist sentiment in people who would normally disavow such ideas!).