Joe Pinsker: I wanted to start by asking you the question that I think is probably the one that people are most likely to have asked at some point: Why are there no bankers in prison as a result of the financial crisis?

Sam Buell: Well, the short answer is we don't know, because prosecutors aren't required to make a report when they decide not to prosecute a case, so we don't know what exactly the evidence is that whichever prosecutors looked at these cases decided wasn't sufficient. So with that big caveat, which is to say we have to speculate, my view is that it's likely that these cases weren't brought because it's very difficult to establish a theory of criminal fraud when you have essentially one sophisticated bank trader selling a product to another sophisticated bank trader and the person who lost in the trade is saying, "Hey, there's more about this that you should have told me that you didn't tell me."

And these are not special fiduciary relationships, like the relationship between some investment advisers and average investors—this is trader against trader in a very sophisticated market. In a criminal case you've got to prove intent to deceive—that is, you've got to prove that there was an individual who at the time they sold that security to the other banker knew that what they were saying was false about that security. So these are hard cases to make, and I think, bottom line, maybe if we were to go through every single one of them, maybe we could find a case here, a case there, to quibble with the government's decision. But the idea that this is an area where you could have imprisoned large numbers of mortgage-backed-securities traders for what they did and the government just sat by and didn't do it, to me, is just totally implausible.

The frustrating thing about the financial crisis is that the victims, of which there were so, so many of us who were severely victimized when this happened, were not parties to the trades that created the problem. We weren't the ones who bought the mortgage-backed securities. So yes, we were victimized in the sense that we were downstream victims in the economy from a sort of risk fiesta that was allowed to go out of control because it wasn't regulated. But because we were victimized doesn't mean that somebody can be put in prison.

Pinsker: It would be easy to, after reading a Matt Taibbi article or watching The Big Short, to come away with the feeling that you just alluded to, that a lot of people should have been locked up. Can you talk a little bit about what narratives like that don't necessarily capture?

Buell: Well, I think what my book's trying to fill the gap in is for a layperson to understand what's going on in the legal system. Certainly the legal system is not optimal, and there are a lot of deficiencies in it, like in any society, but the reason why there's a lot of friction in the legal system is that it's actually very difficult to draw lines between right and wrong in an area where we're essentially saying two things at once: Be aggressive, take risks, make money—but don't hurt people while you're doing it.