The lessons of the crash were: absolutely no one went to jail, and every banker involved made nearly as much money during the worst years of the crash as during any other year.
So, what's the problem?
How the banks ignored the lessons of the crash
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Re: How the banks ignored the lessons of the crash
#22Great article. At the risk of fear mongering, the point about supermarkets was very powerful. "Greed is good" is fine until the money controls the entire infrastructure of society. I live in Argentina, where so many factories were abandoned in our 2001 crisis that workers decided to re-open many of them. Would American workers have it in them if there were a serious liquidity crisis?
>Would American workers have it in them if there were a serious liquidity crisis?
Asian real estate tycoons would own the area before the workers could pronounce "transpacific capital monitoring". much less before they were told factory was being shut down.
Re: How the banks ignored the lessons of the crash
#23Earlier quoted context omitted.
Well, start by giving us a list of who broke the law, and what laws they broke, and we can look up names to find out... That is: Your post assumes that (unnamed) people broke the law. Let's not assume that. Let's either prove it, or not throw innuendo around.
In order to find evidence an investigation needs to be conducted. So, if there is no investigation, there is no evidence, and thus no law breaking.
All right, but in order for an investigation to be reasonable, there needs to be a basis for accusation, or something. We don't just say "AnimalMuppet must be guilty of something; let's start an investigation to find out what."
Re: How the banks ignored the lessons of the crash
#24The last sentence practically says it all: > The big banks have surely drawn a lesson from the crash and its aftermath: that in the end there is very little they will not get away with. and it tells the story of our societies failure and the total failure of our political systems. Maybe in the history books of the future, it will be written as the beginning of the downfall of our societies. But one thing is sure, the…
Doesn't seem like a failure for the people at the top.
Re: How the banks ignored the lessons of the crash
#25Someone correct me if I'm way off, but I've been thinking that leveraged markets and margin trading have more of a negative effect than just creating risk of a domino effect. They also resist change (change that is sometimes needed).
If tons of huge banks have tons of money on the line in leveraged crude oil futures, then there would be resistance to global movement away from fossil fuels. Larger financial markets should in theory provide oil to the gears of the economy, but I think that if the industry becomes so bloated it will actually cause additional friction.
Please point me in the right direction if there is anything written on this topic.
Re: How the banks ignored the lessons of the crash
#26The lessons of the crash were: absolutely no one went to jail, and every banker involved made nearly as much money during the worst years of the crash as during any other year. So, what's the problem?
Ultimately so did the taxpayer. Those bailout loans everyone likes to complain about were some of the best investments the federal government has ever made.
Re: How the banks ignored the lessons of the crash
#27Earlier quoted context omitted.
It's a mistake to treat banks like a monolith. The banks making the worst choices really did pay the price. Three of the five biggest investment banks in the USA either went bankrupt or were sold off for pennies on their previous value. Fannie and Freddie were essentially bankrupted. These companies share holders were wiped out. That's exactly what happens with other businesses in bankruptcy. Well, other than Bear an…
Who went to jail for breaking the law?
In general, banks that break regulations don't result in people going to jail because individuals take action to avoid personal responsibility for anything. There are literally hundreds of thousands of pagers of them, nobody really understands them, and regulators decide which ones to take seriously according to the political winds of the day.
At top banks a major purpose of the regulatory department is to make sure nobody can be blamed for anything. Banks would rather pay billions of fines because no executive is going into engage in a more coherent compliance regime if it means risking jail for something nobody understands. It is common at certain commercial banks to deliberately engage in ignorance, at the risk of being find very large sums, simply to avoid the discovery risk--of regulators being able to pin blame on someone who raised some concern.
Recently the regulators have been hinting executives will be held responsible for systemic failures in their bank. Bankers have been responding by ensuring full compliance with regulations. Just kidding, nobody knows how to fully comply with bank regulations. Bankers have generally responded by ceasing high-risk activity completely. For example, there are tens of thousands of Somali refugees in the US. To my knowledge there is no commercial bank that will help them send money home to their families. Somalia is simply too high risk.
Re: How the banks ignored the lessons of the crash
#28Great article. At the risk of fear mongering, the point about supermarkets was very powerful. "Greed is good" is fine until the money controls the entire infrastructure of society. I live in Argentina, where so many factories were abandoned in our 2001 crisis that workers decided to re-open many of them. Would American workers have it in them if there were a serious liquidity crisis?
The problem with this is that a factory making stuff is useless if people don't want or can't afford the product. The Marxist labor theory of value asserts that value s created when something is made rather than sold, but 1000 pairs of shoes sitting in a warehouse miles away from any consumers who might want to wear them aren't making anyone better off.
Re: How the banks ignored the lessons of the crash
#29Ignored? The lesson was pretty clear: fuck up on a grand scale, and we'll soak the tax slaves to bail you out. I'd say they learned that lesson well.
The last sentence of the article: "The big banks have surely drawn a lesson from the crash and its aftermath: that in the end there is very little they will not get away with."
Re: How the banks ignored the lessons of the crash
#30Earlier quoted context omitted.
Who went to jail for breaking the law?
In general, banks that break regulations don't result in people going to jail because individuals take action to avoid personal responsibility for anything. There are literally hundreds of thousands of pagers of them, nobody really understands them, and regulators decide which ones to take seriously according to the political winds of the day. At top banks a major purpose of the regulatory department is to make sure…
> literally hundreds of thousands of pagers of them, nobody really understands them
BaselII[+] and friends are relatively clearcut and are designed to prevent credit meltdown. The rules and reporting requirements are baked into Bank software and dataflow. Auditors will spank you with fines, and will revoke your accreditation for serial offences. This can force an involuntary acquisition.
> there are tens of thousands of Somali refugees in the US. To my knowledge there is no commercial bank that will help them send money home to their families.
That is the result of draconian anti-terrorism laws and has nothing to do with regulations around credit reserves.
You seem to be concerned around over-regulation, however the article is clearly arguing the opposite: "Deregulation has allowed perverse incentives into the very fabric of global finance."