Fortunately or unfortunately, "encouraged shady behavior" does not directly equate to "illegal". For example, if you encourage someone to steal a car tomorrow you're not doing anything illegal until they actually do it, they tell you they did it, and you fail to report it (accessory at that point). The actual crime part is on them.

It's massively unethical and it feels like people should be in jail, but proving actual crime took place during the lead-up to the recession would be a massive undertaking with little satisfaction as payout, and just as many run-of-the-mill home buyers going to jail as lender associates or executives.

> For example, if you encourage someone to steal a car tomorrow you're not doing anything illegal until they actually do it.

No, you've committed the crime of solicitation at the moment you encouraged a particular person to commit a particular crime. And, if they agree and either of you takes any concrete step to implement the agreement (even short of completing the theft), you've both committed the crime of conspiracy.

> Fortunately or unfortunately, "encouraged shady behavior" does not directly equate to "illegal".

If an expert tells you to break the law and insists it's fine, and you don't really know how all of this works, I don't think we can still call that merely "encouraging shady behavior".

I'm pretty sure we can and do exactly that all the time. Case law established a very long time ago that ignorance of the law is not an excuse for illegal activity. The burden of crime is always on the person committing the crime, not the person inciting it, expert or not (there's a small exception here for entrapment, but that's completely separate from this situation).

I could be wrong here, so if you or anyone else with more legal background than I have can point to specific prosecutions related to this kind of situation I'd love to read more.

“Inciting” is exactly the name given to the crime of inducing someone else to commit a crime.

No, that's only for inciting physical violence (against a person or property) in conjunction with a felony. It would not apply to anything from the mortgage bubble. Unless you've got a specific law to reference?

You lost the jury at “lender policies and incentive structures.”

"Bank employees were instructed to tell prospective clients to lie about their income, drastically, and sometimes helped them do it. Bank employees did this because when people lied about their income, the bank made more money, even though doing so put people at financial risk."

I'm not sure this is a hard case to make.

>Bank employees were instructed to tell prospective clients to lie about their income

But is there explicit proof of this? I didn't think there was, but maybe I'm wrong. I thought at best the argument would be more like:

"Bank executives set up incentives for their employees that they knew would encourage fraudulent behaviour."