Why Isn't Wall Street in Jail?

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Why Isn't Wall Street in Jail?

Postby rjaypeters » Thu Feb 17, 2011 3:37 pm

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Re: Why Isn't Wall Street in Jail?

Postby Diogenes » Thu Feb 17, 2011 4:12 pm


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Postby rjaypeters » Thu Feb 17, 2011 9:44 pm

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Postby Diogenes » Thu Feb 17, 2011 10:01 pm


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Postby choff » Sat Feb 19, 2011 5:57 am

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Postby Diogenes » Sat Feb 19, 2011 4:41 pm

‘What all the wise men promised has not happened, and what all the damned fools said would happen has come to pass.’
— Lord Melbourne —

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Postby choff » Sat Feb 19, 2011 5:04 pm

CHoff

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Postby rjaypeters » Tue Apr 26, 2011 12:39 am

"Don't Let Goldman off the Hook: The damning new Senate report proves Wall Street still can't be trusted to police itself." By Eliot Spitzer

Relevant quotes: "I want to focus on the two most critical conclusions that jump out from these documents. The first has been remarked upon but bears repeating. The second, I do not believe has been discussed at all and is perhaps the more important.

First: The banks traded for their own interests directly against the interests of their clients."

"The second, undiscussed issue is the danger of a self-regulatory market. Remember, the entire predicate to the laissez faire, de-regulatory philosophy that led us to the precipice was that the magic of the market and self-regulation would make the government's intervention unnecessary. Rules relating to capital requirements, leverage ratios, conflict of interest, or any of a myriad of other subjects should be left to the banks themselves."

Back to the original question: 'Why aren't these people in jail?' Probably because we have a two-value legal system in these United States. Wealthy people don't go to jail, poor people do.

EDIT: Sorry, I was so mad I forgot the page reference:

http://www.slate.com/id/2292070/
Last edited by rjaypeters on Tue Apr 26, 2011 11:49 am, edited 1 time in total.
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Postby hanelyp » Tue Apr 26, 2011 2:10 am

'Why aren't these people in jail?'
Because those people, whatever you may think of their ethics, have a healthy aversion to the risk of breaking the law.

I can see points where the law needs revision. To start, we need to get rid of any expectation of bailouts to protect traders and banks from stupidity. If a bank needs assistance to cover deposits, that is prima-facia evidence of insolvency. Related, banks making high risk loans and selling them to fanny and freddy was a problem, as was fanny and freddy laundering the risky mortgages and selling them off.

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Postby rjaypeters » Tue Apr 26, 2011 11:58 am

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Postby TallDave » Tue Apr 26, 2011 8:38 pm

Bleah, Rolling Stone. What a joke.

The risks that led to the mortgage crisis were not caused by traders trading, they were created -- very deliberately, as a matter of intentional policy -- by policies promoted through quasi-governmental entities like Fannie and Freddie, in order to promote a social agenda of affordable housing debt. This isn't even a matter of debate -- we have the actual working papers in which they promoted securitization explicitly for this reason. We have the actual hearings in which Barney Frank said there was no risk to doing this sort of thing.

Yes, regulators often suck at regulating -- welcome to law enforcement -- and Taibbi digs up some fine examples. But the notion this mess was primarily caused by de-regulation is deeply stupid. Regulation is precisely how this monster was created: together the lobbyists and regulators birthed a Byzantine system that could be gamed by creating "too-big-to-fail" entities that promptly fell victim to the inevitable moral hazard that arises whenever risk is foisted onto taxpayers -- free markets require winners and losers. Canada didn't over-regulate, and their simple, antiquated reserve requirements and lack of megamergers saw their banks sail through the storm with hardly a worry.

Whining about how much shareholders decide to pay their execs is fairly pointless -- it's their money. AIG shareholders made bad management decisions and so they lost all their equity. That's the justice of the market, not having those execs dragged off to prison for what were generally bad, but not illegal, transactions engaged in with consent from all parties. The problem arises when gov't allows them to drag taxpayers into it, or become so large -- for the sake of "stability" -- that their failure threatens the entire economy.

The real question, though, is why virtually all goverment agencies get away with financial accounting that would land any private firm in prison. Certainly no private company would ever be allowed to count retirement contributions as income like the Feds have been doing for the last 50 years or so.
n*kBolt*Te = B**2/(2*mu0) and B^.25 loss scaling? Or not so much? Hopefully we'll know soon...

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Postby rjaypeters » Tue Apr 26, 2011 10:20 pm

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Postby rcain » Tue Apr 26, 2011 11:02 pm


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Postby rjaypeters » Tue Apr 26, 2011 11:11 pm

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Postby crazyeddie » Wed Apr 27, 2011 12:35 am



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