You are focusing on a very specific thing (selling mortgage backed securities) as if that was the only thing that went wrong before, during or after the financial crisis. Are you aware of how widespread foreclosure fraud was? Why were Chase executives (to pick an example) not made accountable for that? If I was caught defrauding people out of their homes I would see jail time.

Foreclosure "fraud" is when a bank cannot produced the signed promissory note in a foreclosure proceeding. Proving actual fraud requires proving, beyond a reasonable doubt, fraudulent intent: that the the bank intended to defraud the homeowner by foreclosing on a property it knew it didn't own. But in these cases it's clear that there was no fraudulent intent. It was careless filing of paperwork. In this electronic age, transferring a mortgage still requires handing over that signed promissory note. It's obvious to anyone that what happened is that when banks bought millions of mortgages from loan originators, the electronic records showed the correct transfers but a bunch of the paperwork got lost along the way. Certainly, that explanation is plausible enough that there's no way you're going to convince a jury, beyond a reasonable doubt, that it isn't what happened.

You don't want to call it fraud? Ok, what about criminal negligence then. These executives knew exactly what was going on, and by any reasonable standard should have known the harm they were causing. This is especially applicable if whistleblowers were ignored or silenced.

Software companies knowingly ship software chock full of bugs that results in millions if not billions of dollars of lost profits, lost time, etc. Does that rise to the level of criminally negligent?

it's the specific, core and obvious portion of not having the right one and only legal ownership piece of paper. not that somewhere a bug exists, somewhere a mistake was made, but the mistake was on the order of Microsoft shipping 1 in 1000 versions of word that you cannot print or save.

I don't doubt that the vast vast majority if these people did actually owe money on their mortgages but if you cannot prove it, the market then gets to sort out those companies who can look after the important things from those who cannot.

the market should winnow out fools and incompetents first, not have them compensated by the courts.

First, the software industry has done worse than ship 1 in 1000 versions of something that can't print or save.

Second, software companies often ship bugs knowing exactly what those bugs are.

Third, bringing a foreclosure lawsuit without the promissory note is not per se fraudulent. It's the homeowners job to raise the defense of asking the mortgage holder to show the document. It's only fraud if you intend to defraud the homeowner by foreclosing on a mortgage you know or suspect you don't own.

I'm not saying that banks fraudulently set out to make people homeless - I am saying they were incompetant in losing the certificates (or buying mortgages without them). and that I would favour allowing incompetence to have a market based effect on those who practise it - instead of using the law to protect the companies.

companies ship products with know bugs in in a calculated risk that firstly the bugs do not violate laws and contracts, and second the bugs have no market based effect. if a software company ships with those bugs then they display same levels of in ompetant e

and yes the ratio is probably wrong

About 4 years ago the government tried to prosecute an employer for having illegal immigrants using that basic logic. The employer said he suspected that about half his employees had forged documents, but he obviously didn't know of any specific case. (The Feds trapped him by telling him they were doing a murder investigation and asking him for information about his employees. Don't talk to cops.)

IIRC the prosecution failed, although they did put the guy through the wringer in the meantime.