The exception there swallows the rule. Prosecutors could have, and in previous financial crises did, prosecute top executives under the laws against, for example, wire fraud.
They didn't this time for reasons outlined in the excellent book: Chickenshit Club (https://www.amazon.com/Chickenshit-Club-Department-Prosecute...)
With George W. Bush, Justice deteriorated under Secretary Alberto Gonzalez, who was forced to resign, and the SEC deteriorated under Christopher Cox, whose intent appeared to be to simply let it collapse from inactivity. Budgets were slashed and staffs reduced at the same time as demand for action increased. This is standard procedure for discrediting an institution. The stories of confusion, conflict, lack of direction, leadership or policy are all detailed here. The frustration of the prosecutors is palpable. In the current administration, you can see it real-time at Education, State, and the EPA for example.
The answer to the question is that everything changed. Prosecutors today are actually afraid to file suit, fearing they might lose and have black marks on their CVs. (James Comey famously called them chickenshits.) They have little or even no trial experience any more. Everything is a negotiated fine (never paid by the perpetrators). They have been battered by the collapse of Arthur Andersen, which put a lot of employees on the street, and has given us ridiculous arguments over “too big to fail” and markets that “self-regulate”. They no longer work for the “public good”. They work to get better jobs in big law firms. They want to take their faultless experience in government to make themselves millions from the other side. The revolving door makes this one huge club. This is so far removed from their predecessors as to be unrecognizable. And Eisinger makes this shockingly clear as he proceeds from decade to decade.
Considering people like Preet Bharara are now out, I'd say deterioration is only further accelerating.
It's simply not possible to sell subprime loans as AAA investments without a liberal sprinkling of fraud.
https://www.huffingtonpost.com/william-k-black/the-two-docum...
Some other reading on the subject:
>the Financial Crisis Inquiry Commission, in its final report, uses variants of the word “fraud” no fewer than 157 times in describing what led to the crisis, concluding that there was a “systemic breakdown,” not just in accountability, but also in ethical behavior.
>As the commission found, the signs of fraud were everywhere to be seen, with the number of reports of suspected mortgage fraud rising twenty-fold between 1996 and 2005 and then doubling again in the next four years.
>As early as 2004, FBI Assistant Director Chris Swecker was publicly warning of the “pervasive problem” of mortgage fraud, driven by the voracious demand for mortgage-backed securities.
http://www.nybooks.com/articles/2014/01/09/financial-crisis-...
What actually happened was that major banks were facing a mix of liquidity and solvency crisis, meaning that they were going to go under, but not only they got a cash bailout to deal with liquidity crisis. They also got a QE policy that prop up asset prices they hold, which is equivalent of giving them money and not getting it back.
It's financial wizardry that both the banks and fed made money, where does their profit come from? There are 2 possible scenarios:
1, as fed unwind its balance sheet, the market is going to correct and eventually the fed ends up losing money (to the banks who cashed out first)
2, fed successfully controls the pace of unwinding, so instead of crashing the market it keeps market at a subdued level, absorbing economic growth in the next few years. In this scenario, the profit fed and the banks made are coming from today's and future investors.
From an accounting standpoint it's very simple. Asset prices collapsed during the crisis. The Fed held onto them. Asset prices return to normal levels, and everyone profits overall.
This is the sort of reasoning like the one defended in the article. Of course it's hard to pin blame ... as many individuals worked together to commit the fraud. To me, that seems trivially easy, that means the institution itself, and it's officers (directors and up) are responsible. Because it's fraud, which is criminal, it's not the institution, but the officers directly. Criminal law also has the provision that if you didn't know it was a crime, that doesn't matter : you should have known.
Furthermore this does not mesh with the fact that none of the banks have been forced to make the victims of their fraud whole. None of the CDS investors have received the theoretical value of their investment from the courts, and only very few have even received the amount they paid back. Most got pennies on the dollar. None of the people who lost their house due to foreclosure got it back, BUT when the banks started getting losses because the market dropped when they foreclosed too much, THEN the government stepped in. Then Obama took radical action. Trillions of dollars. Trillions. I don't even know how many zeroes that number has.
Nope, sorry. The Obama government directly, and knowingly decided to legally protect the banks, and even to protect the banks from the consequences of their own fraud (because this fraud they committed resulted in loans not getting paid off ... no worries ! Obama stepped in. Not to protect homeowners, of course, but to protect the banks, make them whole [1]).
And yet ...
When 5 youths rob a store (only one of them, of course, actually stealing anything) ... there doesn't seem to be any problem convicting all 5 of them. There was no proof whatsoever that more than one did anything wrong at all (I'm still thinking the odds of some of them just happening to be in that store not actually in on the crime are pretty good). Happened just this week. Somehow the same reasoning does not apply to banks.
When a 20000 person protest is going on, and 2 of them throw rocks at stores, there is no problem with the police using serious violence against everyone, with them knowing full well that the vast majority have done nothing wrong. Needless to say, broken bones caused by the police are not in fact paid for by the government, not even when there isn't even the slightest claim that the owner of the leg did anything wrong. Not the slightest thing. And of course, prosecutors and courts side with the police.
And let's just not mention what I found when looking into wiretapping. The police has THOUSANDS of internal complaints about abuse of wiretapping. ZERO cases were prosecuted. Zero. Worse: the police actually defended 2 stalkers where the fact that they were being stalked by police officers who got wiretaps on them became obvious to the victims. Bush/Obama/Trump: all the same. They weren't just fraudster-in-chief, but also sexual-abuser-in-chief.
When I get victimized by a fraudulent transaction, the bank is quick to pin it on me. And yet I keep hearing no end of stories that the reverse is also true: when there are fraudulent transactions it is ALSO pinned on the merchant (and I've since come to know how this system works, this is actually true: it results in punishment (financial loss) both for the customer and the merchant. Not, of course, for the bank). Needless to say, courts nearly always side with the bank.
You see, pinning blame is not hard. Even when "it is hard to pin fault on any individual" somehow the justice system seems to find the small guys, and have unreasonable demands on them (see the fraud example above, for some reason both the customer and the merchant get forced to make a big effort to prove they're not at fault. If they don't make this effort, they get screwed, hard. If they do, nobody cares).
[1] http://peoplespolicyproject.org/wp-content/uploads/2017/12/F... (and many other papers)
It would be the case if fed has been accurate at setting prices.
I think you mean today's and future taxpaying workers, which, sure, some of whom are/will be retail investors. But retail investors are the subset of victims with the best relative outcome, because at least they have something invested.
This whole "it wasn't illegal" mindset is just so far removed from reality.
Do people honestly think that Goldman Sachs paid 5 billion dollars in settlement money because they did nothing legally wrong?
No, they agreed to pay such a large settlement to avoid criminal convictions, because what they did was a crime.
This is a whole other topic of conversation regarding Eric Holder's justice department techniques of going after settlements instead of convictions, and sadly the end result is that after all of the settlements are done, and the companies profit off their crimes, somehow people get the idea in their head that the actions were never crimes to begin with.. which is not even remotely true.
Not saying your facts are wrong, but it is very hypocritical of you to accuse others of "garbage logic" with such a terrible argument.
Due to incentives in the U.S. justice system, particularly with regard to prosecution, many, many innocent actors settle or plead guilty even if they're innocent. This problem is well-known and documented.
I agree that someone asserting that a plea deal equals undeniable guilt is also faulty logic, but that was not the argument presented.
My only point is that it's not possible to say that because nobody was convicted that nothing was illegal.. and should be not stated as such.
Please don't equate a poor person with no resources to a company with billions of dollars and massive political clout.
The asymmetry in power makes all the difference.
GS didn't throw away $5B because they were innocent.
2. If I'm interpreting your comment correctly, you're claiming that anyone who is (a) wealthy and (b) settles to avoid further legal costs is automatically guilty. Is this correct?
It absolutely does, though. A poor person can't get a crack team of lawyers to defend them, they get an overworked public lawyer that doesn't have the time to make a decent defense, so it's very risky for that person to go to trial, even if they're completely innocent.
For an entity like Goldman it's the other way around, you only settle if you know you're guilty beyond reasonable doubt, because you can otherwise afford great, dedicated lawyers working full time for years on your case.
No, this doesn't mean that you're automatically guilty if you're wealthy and settle, but the two situations are far _far_ from being equivalent.
That comparison makes no sense. We didnt pay off the bank's debt. It was a temporary loan from the government and every penny was paid back. In addition the government, and tax payers, benefited enormously from the interest accrued.
Free markets would have let the banks fail. Instead we’ve created a world with champions for free markets for trade, free markets for labor, but protected markets for capital. Absolute self-serving hypocrisy. FDIC was designed to protect the little guy. The bailouts protected the richest americans and excellerrated the growing inequality in this country.
I believe in capitalism, but 2008 was the crony variety. It still angers me thinking about watching the crying pundits talk about risk on monitors next to Americans taking real risks in Iraq. The bailouts were bipartisan fraud at a grand scale and epitomize the corruption of establishment politics and the revolving door between government and the private sector. But sure, “americans got paid back with interest.” Believe it if you want to.
[1] https://www.pbs.org/newshour/economy/are-banks-borrowing-fro...
Because the government was afraid failing banks would take everything else with them.
The problem was banks were allowed to become too large and to sell risk to each other. If I were running things I'd break them all up into regional entities and separate them financially.
Risks were grossly and knowingly understated, which was against the law. People were betting with other people's money, with all of the upside but very little of the downside, so it isn't surprising that the market as a whole completely twisted the risk profile, as a largely corrupt industry.
What bailout did (also via QE + ZIRP/NIRP) is prop-up property & asset prices effectively legitimising the prior speculation. This prevented resetting of prices to the levels where people would start buying again for non speculative reasons. Effect is young generation sees houses at 10x earnings whereas the average is 3-3.5x. Boomers sit on tons of unearned house equity that is only there because land prices are inflating like crazy.
For capitalism to work well there needs to be a mechanism for wealth destruction, at least for the "unrealised wealth".
Well, that's never going to be popular, to the extent that all lobbying is going to be diverted to making sure that it's not your wealth that gets destroyed. Have you seen how unpopular even tiny amounts of inflation are?
Getting wealth redistribution would be a start.
Definitely agree we should have paid off mortgages instead though.
What the bankers are accused of doing is classic civil fraud: lying about the quality of assets they sold to investors. These sorts of transactions between sophisticated parties has always been the subject of civil rather than criminal enforcement. (Criminal fraud tends to come into play only where the misrepresentations are more clear cut and egregious, and the victims are ordinary consumers rather than sophisticated counterparties.)
The fact that the government had to come in, and the taxpayer took the hit, materially changes things in my view. That's when the bar needed to shift from civil to criminal.
I'd be happy if laws sat on the book and weren't enforced until just this sort of occasion arose, than the opposite, where we didn't have the laws and can't retrospectively enforce them.
In terms of protections from prison, basically controlling the firms that are meant to police them seems sufficient. No real accountability from the financial crisis seems to show that...
Don't forget Bill Clinton's Community Reinvestment Act too. This lies squarely in his lap.
Glass-Steagall stands out, not in that they'd necessarily have gone to prison, but specific regulation likely could have softened the blow. I realize this is debated, but I wanted to counter the undercurrent of your post that the finance industry isn't working to undermine protective regulation for their own benefit, leaving us in a situation with very little pragmatic recourse for damages.
On the other hand, when you say "fared pretty well" do you mean insofar as "they didn't totally implode"? because at a glance every "bog standard bank" I'm pulling up #'s for over 06-08 did pretty terribly.
That all being said, I'll echo, I agree that glass-Steagall wouldn't have prevented the financial crisis; and potentially had minimal mitigating effect, but stand by my core thrust that it's a datapoint of consumer-serving regulation being overturned by the interested parties to leave us in a situation where instituting even stronger regulation that might impose criminal consequences is politically infeasible.
We repealed Glass-Steagall for the same reason we deregulated airline fares. It was part of a larger, mostly positive trend of deregulating major sectors of the economy. That really has nothing to do with whether there are criminal laws we could’ve instituted. Were we going to put people in jail for trying to combine a commercial bank with an investment bank? Were we going to put people in jail for shoddy underwriting of mortgages?
The fact that people always call for bankers to be jailed, but never specific bankers for specific conduct, is telling. When you’re talking about an anonymous our composite of an entire industry of people, it’s easy to project all the bad intent we consider necessary to prosecuting someone for a crime. It’s much harder when you’re talking about a specific person and his or her specific conduct. “We should send someone to jail because 35% of mortgages in this portfolio should’ve been valued this way if you used these different underwriting standards. No, he didn’t do the underwriting or tell anyone which standards to use. But he was higher on the org chart than the people who did!”
You're touting a narrative that distracts from the actual failure mode of these systems, repeatedly asking for the singular responsibility or legal culpability for the crisis, when that's not what I'm addressing.
My focus is instead on the systemic patterns that allow for these decisions to be made _without liability_. Of course no one person decided, "let's go out and screw over mortgage holders," there was simply no natural incentive to look too hard at if that was happening; and in a political situation wherein even basic protections can't be maintained, _of course_ there wouldn't be laws to assign personal liability.
It's funny that you bring up airline deregulation, as I consider that a wonderful example of exactly the pattern I'm citing. Although costs dropped, service quality followed alongside massive consolidation, soon accompanied by drops in employee pay and benefits, to the point that airlines now regularly file for bankruptcy and use that opportunity to further divest themselves of employee commitments while still giving massive bonuses to executives. (and similarly to the banks, in most of these cases _no one did anything illegal_)
Yet; there is still no hope of even re-instituting regulatory regimes, let alone punitive regimes. (look at recent airline behaviors in the news re: bumping and consumer abuses, and the extremely muted responses for examples of this. While that might not directly result from deregulation, it speaks towards an extremely un-empowered consumer base)
I would cap this rebuttal with a quote to directly shut down your assertion that deregulation has been "mostly positive", especially in light of your airline context, from the former CEO of American Airlines:
"The consequences of deregulation have been very adverse. Our airlines, once world leaders, are now laggards in every category, including fleet age, service quality and international reputation. Fewer and fewer flights are on time. Airport congestion has become a staple of late-night comedy shows. An even higher percentage of bags are lost or misplaced. Last-minute seats are harder and harder to find. Passenger complaints have skyrocketed. Airline service, by any standard, has become unacceptable."
To bring this ramble back to the point, I believe it's the wrong question to ask "what specific law did they break" when we've had a combination of conscious choice to trade worker and consumer protections for lower costs, and incentives aligned behind the powers that be to encourage that, such that even the most basic protections are non-existent, let alone a specific system of accountability.
Airline deregulation has been an unmitigated success for customers.
The only telling thing about is that the system is so incredibly opaque, and responsibility for harm is so diffused in it, that it's a criminal's dream.
What sort of redress should we seek for their reckless behaviour? Criminal convictions, debt forgiveness, nationalization. Not a single one of them took place. Just because the public was not directly being defrauded (even though plenty of actual fraud did take place), doesn't mean that we were not impacted by the fraud that was taking place.
Who was responsible for the Iraq war? Everyone was involved in the lies that lead up to it, but nobody - nobody has been held accountable. Does that mean that there wasn't a thing wrong with how the GOP dragged two countries into it? It's just an unfortunate accident that bad behaviour in bad faith brought about bad results, and we should throw our hands in the air and say: "Well, shucks! What an unfortunate accident! It would be terrible if we sought redress for it... Or changed the rules so that it wouldn't happen again."
> Do you have an example of a law you think should’ve been
> used to put people in prison that we didn’t pass because
> of lobbying?
It's not like there's some independent agency or submission process where people can submit completed bills, which'll only get picked up or not depending on special interests. So we could somehow review the difference between laws that got picked up and passed v.s. those who didn't as some check on corruption.
Rather, the laws don't get written to begin with if they don't align with special interests, that's how pervasive they are.
Writing laws is hard work.
Then "annoying children in restaurants" or something equally absurd would be the #1 most requested law by that metric.
I was referring to laws that would actually get presented to the legislature to vote on, which the GP is proposing as some metric, but as I'm pointing out can't be used as such because the very fact that it's made it that far is a function of special interests, think tanks etc.
He didn't say anything about "being presented to the legislature." As you make clear, the actual legislative votes aren't really all that important compared to everything that comes before that point.
If you attempted to collate such a list you'd end up with an infinite amount of garbage, including but not limited to a proposed law that anyone suspected of wrongdoing be beheaded.
Asking for a specific example of when that has happened isn't rhetorical grandstanding, it's just asking for evidence to support a claim.
So if Donald Trump has a mortgage on a penthouse apartment worth $25 million the government should have paid that off, but some family making $15,000/year that can't get a mortgage in the first place should get nothing? Pay off all the mortgages is a terrible idea.
If there's ever another bailout, they should heavily regulate the people who gain something from it. Not as a punitive measure, but more like a statement of good faith. "If you bought these homes, surely that meant you intended to live in them. So as a condition of the bailout you can't sell them for more than X or rent them for more than Y." It seems drastic, but I can't see many other ways to approach fairness in that situation.
But I don't think we've learned because people are still arguing over whether we should have just thrown the bankers in prison, like the system wouldn't just replace them with more bankers.
It's a terrible idea for a lot of different reasons. Above all because it isn't a good idea. It doesn't come out of any kind of problem solving or optimization logic, just "wouldn't be awesome if I didn't have a mortgage anymore".
> But I don't think we've learned because people are still arguing over whether we should have just thrown the bankers in prison, like the system wouldn't just replace them with more bankers.
People are influenced by fear as well as greed. Of course the system would just come up with more bank executives. We'd want it to. But those bank executives would have something more to fear than just an earlier retirement than they had hoped for. Their greed would push them in one direction and their fear in the other. Hopefully the two would balance out to something closer to the social optimum. At the very least we should expect it to be closer than when there's nothing to fear at all.
It also means rewarding fiscal irresponsibility as people who took 90-100% mortgages on big houses and could barely afford repayments are going to be rewarded while fiscally responsible people who were renting and maybe saving for a deposit down the line get nothing.
The idea that people should be rewarded for making poor choices / taking loans they cannot afford is really worrisome.
Yes it is far better to let the banks fail. Then the system replaces the bankers, with no cost to taxpayers!
If you can target tax breaks to wealthy and companies, you can target benefits to other groups.
If we are going to do wealth distribution why not start at the bottom and work our way up, instead starting in the middle and working our way up to the upper middle?
Sure, universal income and taxing the richest more, re-enacting glass-steagall is better I'm just saying in that situation it would have been more moral to just forgive mortgages than what we ended up doing.
If it's the former, what kind of message would that send to those of us who were responsible enough to avoid getting in over our heads?
Also, I specifically mentioned that some of the blame is on the buyers, so instead of free houses, they could be given the opportunity to continue paying off at the original terms, or a similar form of help. Remember that if the buyers don't get the houses in the end, the banks do instead. And why would we want that to happen?
That is a huge moral hazard. It is essentially same as giving 300k cheque to a selected part of population based on arbitrary logic. How can that be fair to do that? The only fair way to do it would be to just write a cheque for everybody. So all people get the same handout. Any other way is super discriminatory.
I understand that it's appealing for people with mortgages but you have to see how massively discriminatory and unfair that would be.
Wow, OK. Let's think this through a bit further. What effect on the housing market, to say nothing of civil society, would you expect if the government were to stop the music and pay off everyone's mortgages using everyone else's taxes?
No thanks, I prefer people pay their own debts. The bailout was a loan and the banks paid it back with interest, which means the government actually made money while stemming further chaos. Regardless of whether that was the right solution, mass forgiveness of housing debt certainly isn't.
I've never understood the argument that betting against your customers should be illegal. If you're buying something from me then I think that selling it is better than buying it and you think that buying it is better than selling it.
But sellers and buyers are different entities, and the fact that they're different means they can value things differently. If I'm a cobbler and you're a tailor, it's natural that we'd want to trade; I have a surplus of shoes and scarcity of suits, and you vice versa. We value our relative products differently, so when we exchange them, we're both better off.
This doesn't justify me knowingly selling you crap shoes. In fact it's even worse than that: because I know more about shoes than you do, if I sell you faulty shoes, I'm even more of an asshole. Or I'm incompetent.
There are slightly more subtle arguments as to why different entities would value securities differently: different appetites for volatility, different time horizons, different liquidity, and sometimes, yes, different information. If the buyer has better information than the seller, people don't complain as loudly as the opposite.
To me, the whole thing was a mixture of assholes and incompetence. I subscribe to the idea that taking someone's money because you're smarter than them is just as morally wrong as taking it because you're stronger than them. So some clever people took money off some not-so-clever people, and all along the chain a bunch of incompetent people were left holding the bag, and had to be helped out.
I guess I think that every time I've given someone money it's because they're stronger (smarter/better connected/etc.) than me or because they're willing to do something that I don't want to do or because we value things differently. The last case might be the result of different utility functions or might just be the result of a mistake.
It seems like in any other circumstance there wouldn't really be a reason for me to give money.
I'll give money to a cobbler because they're stronger than me in the sense that I physically can't make shoes as well as they can. I'll give money to my house cleaner because they're willing to clean my apartment and I'm not.
I assume you're talking about something like your ECM doing a follow on and your ER putting out a positive report?
I'd argue that it means your compliance department is doing a great job. You generally don't want the two to talk to each other...
I seem to recall the "bailout" was a purchase of bank assets (including stocks, etc.) which was subsequently repaid as the market healed. Which sounds more like lending money rather than giving it away.
Is that correct? And if so, how is that similar to paying off mortgages?
But bank bail out didn’t cost 13, let alone 3 trillions.
I don't know why people keep repeating this. It feels like brainwashing of some sort. Why do people repeat this? Did Obama repeat it a lot at the time, and because many people liked Obama, they just bought that excuse?
It just feels so strange to see people argue against their best interest. Do you want another financial crisis to happen because of the bankers once again? Because that's how you're going to get one - by ensuring nobody gets punished for the last one.
Also, in his final years, Eric Holder admitted that the main reason he didn't go after bankers wasn't because "they did nothing illegal" but because he (and Obama) "thought" (or got paid to think) that jailing the bankers would "hurt the economy". I've never seen a more bullshit excuse.
Also, Holder, but only after he quit the administration, had some "regrets" that he didn't go after the bankers.
https://www.huffingtonpost.com/2013/03/06/eric-holder-banks-...
https://www.theguardian.com/money/us-money-blog/2014/sep/25/...
https://theintercept.com/2016/07/12/eric-holders-longtime-ex...
The entire government system in the U.S. is corrupt from top to bottom. Everyone in an legislative or executive position seems to either only ever do the bidding of their rich donors or ensure that whatever actions they take while in government doesn't hurt their private employment after working in the government (especially when they intend to work in the industries they regulate).
No, you couldn’t prosecute people just for causing the crisis. But there was plenty of crisis-causing illegal activity that could have been prosecuted.
The Quinn family who blew up Anglo-Irish bank eventually did get short jail sentences in addition to their personal bankruptcy: http://www.bbc.co.uk/news/uk-northern-ireland-20167760
There really needs to be a way to hold top executives accountable for the culture they've created, such as at Well Fargo where millions of fraudulent accounts were opened due to the intense pressure created by executive growth targets. This is similar to financial firms bundling shitty loans, paying off a ratings agency to call it gold while knowing full well it's full of shit, and then passing those loans off golden investment opportunities. Yet the people who get caught are those at the bottom.
If you create a culture that encourages bad things(fraud) and do not have checks and balances in place to catch bad behavior(fraud), then you should be held accountable. Typically the executives state they had "no knowledge of what was going on" in the company/department they were supposed to be running and were paid handsomely to do.
1. http://www.nytimes.com/2011/11/08/business/in-sec-fraud-case...
The aggregate impact of such conduct on the world economy is irrelevant to criminal prosecution of individuals. It’s antithetical to criminal law to punish people more harshly because unrelated other people happened to engage in the same wrongdoing.
To use a car analogy, it's similar to VW cheating on emissions testing. They knew they could not keep up, so they just lied instead. Guess what? People from VW are actually getting arrested and likely going to prison.
As far as the impact of their actions on the world economy, there could be a lot to be said about firms colluding with each other to hide and obfuscate the problems they were creating from their fraudulent activity, so that they could continue to enrich themselves. All of these firms failures at accountability being completely isolated events is simply not true.
Madoff isn't behind bars because he blew the money on cocaine. He's behind bars due to: securities fraud, wire fraud, mail fraud, money laundering, making false statements, perjury, theft from an employee benefit plan, and making false filings with the SEC.
That's like saying if I attempt to steal something from a store, security stops me, retrieves the item, then I shouldn't be punished because I didn't get anything from my crime, in fact it cost me money, in gas, going to the store to steal from it...
The "they were defrauding us too" is a weaselly argument - it can be argued that when you are an executive, you represent the company, and directing people to do something, can they really be said to be deceiving/defrauding you by _doing as you directed_?
"Making" 1% interest in a world where inflation is at 2% is not a good use of taxpayer money.
There's nothing stopping bankers from being locked up for their social crimes other than a lack of will or politesse on the parts of the people.
I'd like to see some of these people getting on their high horse go to down to their local criminal part and see how they justice system they are so proud of actually works for people that aren't in one of those categories.
It is better that everyone be subject to the same system, even if that system is unjust, than for there to be two justice systems. Otherwise how the worse one ever going to get better?
The Russians tried it again in 1917, didn't work out well for the lower class then, either.
Pol Pot did it too, with similar results.
And while the existing bailouts incentivized banks to misbehave, paying off mortgages would have incentivized a generation (or two?) to misbehave.. and also further screwed the people who did play by the rules.
Of those two scenarios, I prefer the bank bailout.
Now there are really only two ways this can play out: 1) Organically, whoever was making the (economically) poor decisions is removed from the system by virtue of going broke. 2) The government steps in and the taxpayer settles debts.
Once you enter (2) territory, which is what the US did in the '07 crisis, it really doesn't matter who you give the money to. You are still going to have economic mismanagement. It will continue unless it somehow gets so catastrophic that not even the government can settle it.
Now, the US government is pretty powerful, so maybe that day will never come. But if they are going to get involved at all, why into give the money directly to the little people? They are already throwing out the principles of good economic management.
I would have gone for the more short term painful but long term better option of letting them fail. What would have replaced it would not have been as fragile in this regard. (The replacement would have had other weaknesses.. but not these.)
Banks willingly hired workers to change records
We should own all the banks, all the land. We are renting our own countries back off these guys after bailing them out.
For $3 trillion less than bailout, we could have paid off every U.S. mortgage! http://www.jameslavin.com/articles/2009/04/16/for-3-trillion... [need better source??]
Without bank bailout we'd buy banks for pennies. Market forces would work and banking sector would be incentivised to behave properly.