Restorative Justice, White-Collar Crime, and the 2008 Financial Crisis

Abstract

Despite potential criminal behavior, no senior executives from major U.S. financial institutions were incarcerated for actions related to the 2008 financial crisis, an outcome decried by a variety of academics, journalists, and judges, as well as the broader public. This critique is premised on a retributive theory of justice and the belief that incarceration is an effective deterrent against future crime. But are calls for more criminal sanctions warranted? Restorative justice offers an alternative lens to critically evaluate the retributive paradigm that supports calls to put more bankers in jail, and underlays the broader approach to criminal justice in the U.S. Though restorative justice has been increasingly used around the world for blue-collar street crimes and state crimes, its theory and application to white collar crime is less well developed. This research fills that gap by evaluating the governmental response to financial wrongdoing related to the 2008 financial crisis through the lens of restorative justice. I argue that a restorative justice approach to financial regulation is theoretically desirable and outline a variety of financial regulatory reforms to more closely align the Department of Justice’s approach to white-collar financial crime and federal financial regulators’ approach to banking regulation with restorative justice principles.