A comparison and discussion of criminal
prosecutions in the history of major
James F. Gilsinan
Department of Sociology, Saint Louis University, St. Louis, Missouri, USA
Department of Economics, Saint Louis University, St. Louis, Missouri, USA
Department of Finance, Saint Louis University, St. Louis, Missouri, USA, and
Department of Marketing, Saint Louis University, St. Louis, Missouri, USA
Purpose – The purpose of this paper is to understand the reasons why some nancial crises do not
result in extensive criminal prosecutions.
Design/methodology/approach – The authors examine three major events: the crash of 1929
leading to the Great Depression, the collapse of the US Savings and Loan industry circa 1990 and the
sub-prime mortgage meltdown. The authors explain how circumstances surrounding these nancial
collapses led to stark differences in criminal prosecutions.
Findings – This review of prosecutions during three nancial crises underscores the contingent
nature of seeking criminal penalties for nancial wrongdoing. The decision is inuenced by a number
of factors, including a prosecutor’s level of risk tolerance (probable win test); the potential economic
impact of a successful conviction; the number of laws and regulations available in the prosecutorial tool
kit; and the desired outcome which can range from new regulatory structures, to prosecutions that x
blame and satisfy the desire for scapegoats, to seeking nancial penalties that shore up the
government’s bottom line.
Research limitations/implications – This study covers three crises and focuses on the US
responses. A broader study could look across countries.
Practical implications – Regulators and lawmakers are interested in avoiding future crises.
Because crises are not anticipated, responses are determined by conditions of the moment. A frequent
result is that laws and regulations are not in place. Decisions about likely preferred responses would
allow anticipatory legislation and regulations.
Social implications – Financial crises obviously have major implications for ordinary citizens far
removed from the centers of nance. Improved responses to mitigate or avoid disasters would have
profound impacts on people’s quality of life.
Originality/value – The three crises have been studied individually. This work is different in that it
examines the impact of a common set of factors over three crises covering a span of 80 years.
Keywords Finance, Crises, Meltdown
Paper type Conceptual paper
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Journalof Financial Crime
Vol.22 No. 1, 2015
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