I hope this doesn't come across as me trying to justify what happened but can anyone be explicitly about what laws were broken and who should have gone to jail? I know there was a bunch of outrage but want to cut through all that and get at exactly the issue.
A lot of lower level mortgage brokers clearly committed fraud in the applications they processed. There may be some criminal or civil negligence by middle management by ignoring the fraud in an attempt to meet quotas. Unfortunately, it's hard to pin much of anything on the higher level executives.
There was a time when fractional reserve banking [0] was considered simple fraud (it wasn't called "fractional reserve banking" at the time, it was "bankers using for personal gain assets that were owned by another and stored for safe keeping at their bank.")
So, as banking gets complex, the laws get complex. Once we decide fraudulent (fractional reserve) banking is legal, most of the rest can be whitewashed with enough handwaving.
I know the assertion that fractional reserve banking == fraud is extremely contentions, and most disagree with me. Feel free to explain why you disagree!
It's pretty obvious, actually. If you tell people you're doing it, and they still choose to give you money in exchange for the good or service you're actually performing, it cannot possibly be fraud.
Banks are very up-front about the fact that they're doing fractional reserve banking. You set up accounts in full knowledge of the fact that some of your deposit will be used for investments and that - if too many people try to withdraw the full value of their account at once - the bank may run out of reserves and you will be unable to withdraw.
Even an outright Ponzi scheme wouldn't be fraud in any moral sense if it specifically and openly said you would be investing in a Ponzi scheme and that any returns entirely depended on the extremely unlikely gamble that you would be among the first, rather than last, people to invest. (In fact, there are quite a lot of Ponzi schemes like this in cryptocurrency; at one point they made up a fairly significant proportion of all Ethereum transactions. They were treated - correctly, I think - as basically just a form of gambling for entertainment.)
And whatever your opinion of fractional reserve banking, even if you do think it's fraud you have to admit that it's clearly much less fraudulent than an outright Ponzi scheme.
I challenge the relevance of your point of view. Always bringing up federal reserve banking is not relevant.
World has changed and narrow money under fractional reserve is less relevant today. Crypto or gold coin can't change the system when the system does not run on narrow money. That's why federal banks have less control today than ever before.
Capital ratio requirements limit banking more than reserve requirements. Do you agree or disagree?
Swiss people had a change to quit fractional reserve banking few months ago using popular vote. When the facts were presented, many people were surprised to learn that only 20% of the money assets in Swiss banks were under fractional reserve banking system and only thing abandoning it would do is that normal people would have to have to keep more cash in their account. Massive financial industry in Switzerland is not running on narrow money.
Financial crises don't start with narrow money. There are more and more assets that are almost as liquid as money under normal circumstances[1] but they are not money. Within just few hours you can turn them into cash [1].
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[1]: Normally very money-like liquid assets separate from broad and narrow only during crisis. Other asset types stop being liquid but central banks provide money so that shops can stack their shelves and people can buy food and gas and not to loot to survive.
You seem to be defining fractional reserve banking to be fraudulent (in your second paragraph). That's not a useful perspective for trying to get real answers to your questions.
When banking was "I'll store your money for you in a safe place for a small fee", fractional reserve banking was fraud, because it was not doing what you told people you were doing, and in a way that could cost them their money. Once fractional reserve banking became the normal way banks operated (that is, became both legal and expected), it's no longer fraud. It may still be immoral and/or unwise, but it's not fraud.
Now, there was plenty of fraud in the run-up to the 2008 crisis. ("Liar loans", anyone?) But that's distinct from fractional reserve banking itself being fraud.
By that logic anyone who gave out a loan should be thrown in jail. After all there was a time when charging interest of any kind was considered usury and was illegal. Once we decided that usury banking is legal, most of the rest can be whitewashed with enough handwaving.
