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Federal prosecutors have been busy with insider trading cases. This week they indicted SAC Capital, one of the most prominent and profitable hedge funds in the world. But another sort of alleged financial malfeasance has not brought many prosecutions. NPR's Chris Arnold examines why so few criminal charges have been filed in relation to the financial crisis that sent the economy into a tailspin.

CHRIS ARNOLD, BYLINE: Okay. So we're seeing more and more insider trading cases but what about the financial crisis? Why haven't any high-profile bankers gone to jail for selling all those trash mortgages and helping to wreck the economy?

NEIL BAROFSKY: I hear that all the time and people ask me about it all the time. And I try to give the best explanation that I have as being inside of the system.

ARNOLD: Neil Barofsky's a former federal prosecutor who also served as the special inspector general in Washington overseeing the big TARP bank bailout.

BAROFSKY: The folks responsible for this incredibly painful economic damage that struck our economy have gone free.

ARNOLD: Barofsky stresses, though, he likes the insider trading cases which have resulted in more than 70 convictions so far.

BAROFSKY: This sends a very, very powerful message to the entire industry.

ARNOLD: So Barofsky says that was a good use of government resources, but he says when the financial crisis hit, white-collar crime investigators already had their hands full with these expanding insider trading investigations. So he says what should've happened is that the government should've thrown a lot more investigators at the financial crisis. But he says that didn't happen.

WILLIAM BLACK: I've been saying it for years, you have to make the effort.

ARNOLD: That's William Black. He was a top lawyer for the Office of Thrift Supervision during the savings and loan debacle in the 1980s. That means that he was involved in a lot of criminal prosecutions.

BLACK: At peak we had a thousand FBI agents working those cases.

ARNOLD: Black says when the financial crisis hit there were only 120 agents working on bank fraud. And on top of that, he says that mortgage fraud cases against big financial firms are just tough cases to bring.

BLACK: Insider trading is a much more understandable case for a jury, typically.

ARNOLD: Somebody got access to confidential information, say a drug trial was going badly, so they used that secret information to cheat and make a lot of money in the stock market. Pretty simple. The financial crisis, though, is more complicated. It involved mortgage securitizations and sophisticated investment instruments.

BLACK: It would be much more difficult than the insider trading cases.

ARNOLD: Also, right after the financial crisis, the government lost a case involving Bear Stearns, so maybe that didn't help. Also, back then, the government wanted to save the banks, you might remember. So perhaps launching a full-scale prosecutorial assault just didn't seem like the best idea. But also, Neil Barofsky says that narratives tend to take hold in Washington. And for this financial crisis, the narrative is this: A lot of people on Wall Street were wrong. They made mistakes. They were greedy. But they didn't commit actual crimes.

You could hear that when Jamie Dimon, the CEO of JP Morgan Chase, spoke to CNBC host Jim Cramer last week.

(SOUNDBITE OF TV SHOW)

JAMIE DIMON: Look, I think if someone did something wrong they should go to jail.

JIM CRAMER: Well, who did? Who went to jail?

DIMON: I mean, one of the great things about America is failure is not illegal or wrong. You make investments, they don't always pay off. And that doesn't make you a criminal.

CRAMER: Right.

ARNOLD: Barofsky says this explanation appears to have taken root quite strongly in Washington.

BAROFSKY: And that's the justification to explain the lack of cases.

ARNOLD: And do you think that narrative is right, that there wasn't criminality going on behind the big financial crisis?

BAROFSKY: No. I think that there was a tremendous amount of fraud.

ARNOLD: For his part, William Black says it's still not too late to prosecute financial firms who may have been involved in wrongdoing. He says scores of private civil lawsuits have uncovered evidence. And those could provide a roadmap for criminal prosecution. Chris Arnold, NPR News.

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