Criminology Journal Suggests Ways To Forestall White-Collar Crime


In the journal Criminology & Public Policy, Tomson Nguyen of the University of Houston–Downtown and Henry Pontell of the University of California, Irvine document the role of inadequate regulation, indiscriminate use of alternative loan products, and lack of accountability in the subprime mortgage industry in leading to the current economic crisis. Interviews with representatives from various sectors of the U.S. mortgage market showed conflicts of interest involving rewarding brokers for placing borrowers at higher cost loans. Nguyen and Pontell suggest a bonus system that rewards quality screening of applicants instead of how many loans brokers can secure.

Also in the issue, John Braithwaite of the Australian National University points to some Asian economic regulators who refused to expose their citizens and banks to bad U.S. housing loans. He argues that effective fraud prevention will require brokers, bankers, and rating agencies to be convinced that regulators would indeed escalate interventions until identified problems are solved. David Friedrichs of the University of Scranton linked such a diffusion of responsibility with a widespread acceptance of fraudulent conduct among mortgage originators. Editors Neal Shover of the University of Tennessee and Peter Grabosky of the Australian National University conclude with a three-pronged approach to “forestalling the next epidemic of white-collar crime,” which includes strict prohibition of certain financial instruments–such as derivatives trading–precisely because of their potential for misuse. The issue is made available to members of the American Society of Criminology; journalists who want access should message Ted Gest,

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