Document Type



Politicians, journalists, and academics alike highlight the paucity of criminal prosecutions for senior financial executives in the US in the wake of the 2008 financial crisis. One common argument for the lack of prosecutions is that, though industry players behaved recklessly, they did not behave criminally. I evaluate this claim by detailing the civil, and small number of criminal, actions actually taken and by reviewing leading arguments about whether behavior before the crisis was criminal. Rejecting the “reckless innocence” explanation, I provide examples of criminal behavior that could have been prosecuted and review the literature on why there were few cases made, despite potential criminal activity. Though scholars identify numerous explanations, I argue a combination of inadequate investigatory resources and regulatory capture offer the best explanation. I then explain Iceland’s different approach and why it successfully criminally prosecuted senior executives from its three largest banks, among others. Though the size of the two economies and the impact of the crisis for each explain a large part of the different roads taken, the independence and outsider status of Iceland’s prosecutor also contributed, and is instructive for how the US could structure its regulatory apparatus, should it want to prioritize prosecutions in the future.