[0]https://www.propublica.org/article/carmen-segarras-secret-re...
[1]http://www.thisamericanlife.org/radio-archives/episode/536/t...
Enron was probably the last big corporate take-down by the government.
From an interview http://www.democracynow.org/2014/4/15/who_goes_to_jail_matt_...
But at the bottom of it, there was this thing that he [Eric Holder]
laid out called the "collateral consequences doctrine."
And what "collateral consequences" meant was that if
you’re a prosecutor and you’re targeting one of these big
corporate offenders and you’re worried that you may
affect innocent victims, that shareholders or innocent
executives may lose their jobs, you may consider other
alternatives, other remedies besides criminal
prosecutions—in other words, fines, nonprosecution
agreements, deferred prosecution agreements.
And again, at the time, it was a completely sensible
thing to lay out. Of course it makes sense to not always
destroy a company if you can avoid it. But what they’ve
done is they’ve conflated that sometimes-sensible policy
with a policy of not going after any individuals for any
crimes. And that’s just totally unacceptable.
Too big to fail; too big to jailNice. And this then becomes a brinksmanship game. The act of flauting the law is now coin of the realm.
Enron was taken down by ... the running dogs of CALPERS. "My fund can beat up your fund" so to speak. This is why we can't have affordable housing - the spall from Enron painted the whole state of Texas.
>>> shareholders or innocent executives may lose their jobs
Shareholders are unlikely to be affected to a large extent because their holdings in Enron would probably make up a small portion of their net worth.
Executives are paid large salaries and so can deal with the effects anyway.
I'd be much more concerned with the rank and file.
Enron's accounting gymnastics were precisely to defraud their shareholders. How is that negligence on the part of the shareholder? It's not - it's criminal on the part of the executives.
Of course it is. Because in that case the perpetrators are the corporate officers and the victims are the shareholders. The shareholders were partially responsible for not choosing better officers, but for that they can only blame themselves.
But there are times when officers choose to harm third parties in furtherance of the interest of the shareholders. They do something illegal because it's profitable. And in that case losing their money is exactly what shareholders deserve for choosing officers with no scruples.
So if this kind of behavior is prosecuted and severely punished (e.g. lifetime prison sentences) - shareholders would be less likely to be defrauded.
The protect-the-shareholders attitude is entirely oxymoronic here, since it just means that those exploiting the share-holders and the corporation know they are unlikely to face significant consequences and this encourages others to do likewise.
It's also the case that I was thinking more about the companies that are fined and keep operating with all the same officers in place than I was thinking about companies that implode. For example, shareholders of JP Morgan apparently aren't real sad with Jamie Dimon.
Speeding often has surprisingly low fines. Get caught doing 115 in a 65 mph area in Florida. That's ~1,000$ for a first offence. Second time they revoke your license for a year and more than double the fine, next they revoke it for 10 years and charge you 5k.
But, first time around it's kind of meh, IMO. Of course you will probably also get reckless driving which is stiffer. http://www.leg.state.fl.us/Statutes/index.cfm?App_mode=Displ...
Considering the high risk of killing someone you would think the could come up with a better deterrent.
The funny thing is, he never got so much as a jay walking ticket after that, so the punishment definitely straightened him out.
I think it's a lot easier to play off speeding as a youthful indiscretion than drunk driving, as well.
- Canadian raised in the US, spent a fair amount of time in Canada
Going 50km over is an instant roadside suspension and a $2,000 - $10,000 fine.
That's still below the legal speed limit on some German roads. But it's above the highest recommended speed of 130 km/h (~ 80 mph).
The governor is merely a gentlemen's agreement between the big car manufacturers, and any garage will take it out no questions asked.
Speed limits on interstate class roads seem pretty dangerous to me - you can watch people thinking "but I'll get a ticket" and backing off at bad times. Of course, I guess of there were no signs with numbers on them they'd drive 115 and kill themselves.
If most drivers are "automatically" adding 9-10 MPH to the speed limit, it means the speed limit is too low.
Targeted or not, they like to do insanely stupid things like park their cruisers on the shoulder of a bridge, inches from the lane of travel, lights off, at night, trying to "ambush" people.
I drive from Mercer Island to Spokane every weekend, and I commute from Puyallup to Mercer Island every day for work.
Going to work I'll see anywhere from two to five WSP, but usually traffic isn't moving fast enough for them to ticket. (Although, most mornings they have one or two people pulled over in the bend just in I-5, just a couple minutes north of the Tacoma Dome.)
Driving across the state I've only been pulled over once (near Ritzville). I won't say how fast I was going, but it was fast enough that right when I saw the headlights on her patrol car I immediately pulled over and waited for her to give me a ticket. (Which she did, and she knocked it down to something a bit more reasonable, money wise.)
Now when I drive across the state I just throw my cruise control on at ~83 MPH (the extra three because it helps me get ahead of those cars whose speed "drifts" from 75-85 and back again, which is very annoying). Usually I'll drive past two or three officers who just sit there and watch me fly by at thirteen over.
IMHO the worst are the county sheriffs near the Chelan area. Those guys will ticket you for 51 in a 50.
Unrelated: are you from Poulsbo?
Eastern WA is just so much less populated.. maybe they stand out more, but they're not as common IMO. Granted, your speed will be higher when you DO get busted, and there are definite speed trap downs like Ritzville and Colfax, but I never found it to be anywhere near as bad as the metro areas.
And yeah, they can just fire all those assholes. They're absolutely terrible and do nothing to promote road safety -- it's the exact opposite.
You probably couldn't use that in court to get out of a ticket, but as a matter of enforcement a massive amount of speeding is routinely tolerated.
You probably won't "see it" until it happens to you. Highway patrol is managed for revenue generation rather than public safety.
This is whitewashing. In all the ways you can apply it.
when you don't run within the majority culture you are always making mistakes in their interpretation
and then you have law officers who choose to make examples every now and then.
guess who gets booked?
PS : one of the advantages of privilege
"The oft-cited explanations—campaign contributions and the allure of private-sector jobs to low-paid government lawyers—have certainly played a role."
Emphasis on "have certainly played a role." The moment I hear that, I ask why the hell we aren't focusing the conversation there and keeping it there. Guarantee a lot of the "lack of balls" has to do with worrying about future security in the form of campaign contributions and private-sector jobs.
How about we solve for that problem first and see if they still lack balls when they are no longer worried about their financial future being directly tied to those they are supposed to police.
* If regulators hurt the industry they're regulating, it means fewer jobs will be available for them when they switch to the private sector.
I just don't think the narrative about regulators going easy because they're hoping for a sweet gig at Goldman is consistent with what happens or even a theoretical analysis of peoples' incentives.
Ultimately, it's politics. Bill Clinton implemented massive deregulation in the financial industry. Regulation is seen as an illegitimate intrusion into the market's operation. So long as that is the case, regulators will avoid being aggressive for fear of provoking a political backlash.
Does losing money hurt an industry?
Can overregulation hurt an industry?
> SEC lawyers generally don't go to banks--they go into private practice law firms. Those firms make money when banks get in trouble.
Yes, they make money from banks when banks get in trouble.
> Yes, they make money from banks when banks get in trouble.
Sure, but in an environment of weak enforcement where banks never get into trouble, there isn't any money to make.
Maybe you live in a different reality, but in ours, the massive reputation hit the bank would suffer from having its employees go to jail would be tremendously more costly than meager fines that they can just shrug off.
[0] https://en.wikipedia.org/wiki/Tom_Wheeler#Net_neutrality
This is the one case where regulators would have massive popular support, specially in an election year when two very popular candidates (well, three if you believe Hillary's latest statements) are calling for stronger measures against the people responsible for the "Great Recession".
For instance, could we pay the regulators enough for it to become attractive? Over time, maybe being a regulator will become the end goal of new grads.
http://www.bloombergview.com/articles/2014-06-26/strict-regu...
"Here are some possible theories of the financial-regulatory revolving door:
...
2. Regulators want to get higher-paying jobs at banks, so they try to be diligent, fair, competent and zealous, so that the banks are impressed by them and hire them.
3. Regulators want to get higher-paying jobs at banks, so they are hard on banks in ways that force the banks to hire lots of ex-regulators -- to understand complicated rules, say, or to work as monitors for regulatory settlements.
4. Regulators want to get higher-paying jobs at banks, so they are hard on banks in general, hoping that the banks will hire them to just shut them up."
Also, a bank would prefer to reward the boss or co-workers who fires an over-zealous regulator to rewarding an over zealous regulator.
The whole absurdity you quote reads like something someone else hoping to be hired by a bank would write...
I'm usually pretty skeptical, but reading an article on "how hard regulators are on banks" from someone who worked at Goldman Sachs in the 2007-2011 period, I had to chuckle.
That's a little harsh. Everybody loses their balls quickly if they aren't backed up by their bosses.
Side comment: The GS head of technology recently left there to go to an at-best-mediocre options brokerage recently, which I recently left. Not gonna lie, that makes my suspicio-meter go off after seeing the shenanigans they did there.
Side note again: Another thing that pushes my supsicio-meter pretty far is seeing secret service, Harry Reid and a very well known name in HFT walk into an office and talk to each other for an hour.
I don't want to come to any direct conclusions, but "People are shitty" comes close.
"Get big government out of my business!" "These regulations are killing my business!" "People are going to go overseas and do the same thing!"
It's not just congressmen too. Even the public can be turned against the regulators with a steady drip of anti-regulation rhetoric from the newsmedia.
This is a corollary of "it's twice as hard to debug something as it was to write in the first place."
If you're a peon, "doing your duty" is a great way to put a target on your back.
It seems like one of the hardest problems to solve in our society because it seems to be so tied to our nature. I can recall doing things in grade school I knew was wrong but felt obligated to do because my peers and those I looked up to do too. While that isn't the same exact situation, the dynamics at play are the same. What can be done to combat this innate in-group/out-group behavior more effectively in our organizations and society?
https://en.wikipedia.org/wiki/Regulatory_capture
https://en.wikipedia.org/wiki/Public_choice
What's interesting to me is that quite smart people would expect the SEC to act otherwise.
Did we learn nothing from "Point Break?" :)
However, I really don't understand how Goldman would have profited from aiding Paulson & co. Goldman set up a security that let people bet for or against the housing market. It's similar to Vegas letting people bet on a sports match. Why would Vegas fix the game that other people were betting on? It's not like Goldman made more money because Abacus paid out to Paulson vs. the Germans.
"Nor had they questioned top bankers in Goldman’s mortgage businesses or any of the bank’s senior executives. Even more surprising to Kidney, the agency had not taken testimony from John Paulson, the key figure at his eponymous hedge fund."
An investigator that doesn't ask questions will have a hard time finding evidence.
My point is tjs Goldman is the house and made money from the deal not the outcome.
But there's no evidence anywhere. Sorry. Right.
As far as regulators go, there is not much more fear and respect and obedience they can get.
So why make an example of anyone when day-to-day regulators are the big I ams
A sort of reverse Regulatory capture has been achieved. The regulators are calling the shots, but don't see the need to dig deeper.
The best analogy I can give is if Lord Ventinari from disc world were running 30's Chicago - Al Capone has been tamed, does not rock the boat and only kills his "own kind". Why should cleaning up the city and arresting Capone be a priority - he is under control.
I like discworld novels but I am not sure I want to live innsuchba compromised society
http://www.bloombergview.com/articles/2014-06-26/strict-regu...
http://www.bloombergview.com/articles/2016-04-12/mortgage-de...
http://www.bloombergview.com/articles/2016-04-14/argentine-b...
If regulators really are harsh so banks hire them "to get them of their backs", presumably banks have an expectation that this works, causing in the long run, softer regulation.
The alternative theory that regulators are incentivised to be diligent and fair so banks will hire them on that basis is... not compatible with most people's understanding of the financial sector's culture.
Wouldn't you? The regulators receive direct or indirect instructions. They can see what happens when they choose not to listen. So why bother playing hero? Real life is not hollywood. You can always make the opposite argument no matter how flawed might be e.g. "hey! this guy is killing corporate America whilst the entire world is the midst of a crisis! It's crazy right?", you know how many bellow 50k/year households will buy that argument? It's crazy ;-)
This is a government policy, whether is good or bad depends on which side of the fence you stand. It's bad for the majority and for the rule of law, but who cares.
Panama papers is not a "leak" it was a hack by the NSA and only released a bunch of info on Panama based shell companies that are largely BRIC nations, none the US - and that it is a PSYOP to get a bit of anger against specifically others to protect US financial hegemony...
The only country to prosecute bankers/Wall Street - the PM resigned after he got caught doing the same thing.
It's revenge and a pre-emotive attack - but one that kind of lost control.
Watch the Panama papers doc to see how In The 2013 doc PBS' "the warning" the DOJ literally stonewalls against all questions regarding going after Wall Street.
The whole system is absolutely a corrupt greed ponzu scheme.
What happened those three vids, please, and give me your opinion.
Bernie would change that if given the opportunity.
Even if all he does is make Hillary very nervous before losing the primary to her, I would hope that would still get the SEC's attention as well as hers.
Bernie has a history favoring weapon makers from his own state as well as going after people using his logo, so we can be pretty sure that given the opportunity it will not all be as wonderful as he promises.
And who knows what they have collected about him in the meantime. There must have been a reason why Obama turned 180 so suddenly, as soon as he was in office.
The only "subtler" thing is that corrupt actors of this sort need to manufacture vague and appealing alternatives to plain-old-corruption in order to look themselves in the mirror.
The other component to this, is that regulatory compliance becomes a significant barrier to entry for new firms. Incumbents end up gaining even more organizational power as market power increases, and competition on price and service quality decreases.
"In our conversations, Kidney reflected on why that might be. The oft-cited explanations—campaign contributions and the allure of private-sector jobs to low-paid government lawyers—have certainly played a role. But to Kidney, the driving force was something subtler. Over the course of three decades, the concept of the government as an active player had been tarnished in the minds of the public and the civil servants working inside the agency. In his view, regulatory capture is a psychological process in which officials become increasingly gun shy in the face of criticism from their bosses, Congress, and the industry the agency is supposed to oversee. Leads aren’t pursued. Cases are never opened. Wall Street executives are not forced to explain their actions."
Basically, regulators don't have the balls to go after the big guys.