Cleaning Up the Financial Crisis of 2008: Prosecutorial Discretion or Prosecutorial Abdication?

BNA Criminal Law Reporter, March 2013

Brooklyn Law School, Legal Studies Paper No. 331

6 Pages Posted: 22 Mar 2013

Date Written: March 20, 2013

Abstract

When finance professionals play fast and loose, big problems result. Indeed, the 2008 Financial Crisis resulted from people in the real estate finance industry ignoring underwriting criteria for mortgages and structural finance products. That malfeasance filled the financial markets with mortgage-backed securities (MBS) that were worth a small fraction of the amount issuers represented to investors. It also loaded borrowers with liabilities that they never had a chance to satisfy.

Despite all the wrongdoing that caused the financial crisis, prosecutors have been slow to bring charges against individuals who originated bad loans, pooled bad mortgages, and sold bad MBS. Unfortunately, the lack of individual prosecutions signals to participants of the financial industry that wrongdoing not only will go unpunished but will likely even be rewarded financially. Without criminal liability, we risk a repeat of the type of conduct that brought us to the edge of financial ruin.

Keywords: Financial fraud, prosecutorial discretion, mbs, misrepresentation, fraud, REMIC

Suggested Citation

Borden, Bradley T. and Reiss, David J., Cleaning Up the Financial Crisis of 2008: Prosecutorial Discretion or Prosecutorial Abdication? (March 20, 2013). BNA Criminal Law Reporter, March 2013; Brooklyn Law School, Legal Studies Paper No. 331. Available at SSRN: https://ssrn.com/abstract=2236411

Bradley T. Borden (Contact Author)

Brooklyn Law School ( email )

250 Joralemon Street
Brooklyn, NY 11201
United States

HOME PAGE: http://www.brooklaw.edu

David J. Reiss

Brooklyn Law School ( email )

250 Joralemon Street
Brooklyn, NY 11201
United States

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