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The U.S. Needs to Crack Down on White-Collar Crime

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Re: The U.S. Needs to Crack Down on White-Collar Crime

#61

Post by UncleEntity »

freehunter wrote: post #20
mulmen wrote: post #4

Earlier quoted context omitted.

The drug war has been disproportionally devastating along racial and to a lesser extent economic lines and ineffective at its stated goal. Why would we want to reuse this failed strategy to fight another kind of crime?

Just because the overarching goal of a project is awful doesn't mean every detail about the project is awful. There are lessons to be learned from every failure, and like it or not the war on drugs funds itself quite well through asset forfeiture. Case in point: no one would argue the Nazi regime was anything approaching "good", but when the war was done, we didn't throw away the V2 rocket and start research from scr…

> ...but when the war was done, we didn't throw away the V2 rocket and start research from scratch.

But we did throw away all the research they did on unwilling human subjects even though it could conceivably have lead to better science if we ignored all the "racist bullshit"...

Re: The U.S. Needs to Crack Down on White-Collar Crime

#62

Post by Latteland »

harryh wrote: post #27
Retric wrote: post #25

Earlier quoted context omitted.

It's not about criminal convictions. In theory it's just a civil case with a criminal case to follow. Which is why SEC fines are often less than the net befit. But, the actual number of criminal cases is rather low. EX: "In June 2009, the SEC sued Angelo Mozilo, former CEO of mortgage lender Countrywide Financial, and two other former officers, charging that they misled investors about the quality of Countrywide's lo…

It's not at all clear that all of Mozilo's earnings came from fraudulent activity. In fact, it's almost certainly true that this is not the case.

But the general thesis that people are making so much money from their crimes that they don't fear criminal penalties seems to hold. like the 2.x billion in profits lost from the 1.9 billion fine?

Re: The U.S. Needs to Crack Down on White-Collar Crime

#63

Post by Latteland »

jstanley wrote: post #16
Waterluvian wrote: post #9

Earlier quoted context omitted.

I'm a bit surprised to find someone suggesting that selling prescription pills under the counter shouldn't be illegal. Do you mind elaborating on your perspective?

If there's a willing buyer, and a willing seller, and the goods aren't stolen, and the seller isn't lying about what the goods are, then who is the victim? If there's no victim, there's no crime. (And, yes, identical logic does apply equally to illegal drugs).

But the law doesn't work that way, what's technically illegal is illegal. Prostitution and illegal drug use are two things in that camp.

Re: The U.S. Needs to Crack Down on White-Collar Crime

#64

Post by liftbigweights »

zekevermillion wrote: post #12

We don't need a "crackdown". The problem with our approach to financial crimes is that it is based almost entirely on crackdowns -- splashy press releases that are supposed to deter all the thousands of other financial crimes that we lack resources to prosecute. Sometimes this leads to injustice, e.g., see the documentary film Abacus: Small Enough to Jail. The only bank to be prosecuted criminally for shenanigans in…

> Abacus: Small Enough to Jail.

My goodness that documentary had me so infuriated. If people haven't seen it, I highly recommend it.

> The only bank to be prosecuted criminally for shenanigans in the subprime era.

That's the amazing part. Out of all the multinational "too big to fail" banks in NYC, they went after a small community bank. Just on optics it looks terrible, but the bank they went after actually had very low numbers of defaults and foreclosures.

That was as clear a case of bullying as I've seen. They went after the smallest bank they could find to intimidate them and force them to settle so that they can tell the press the banks were punished for the financial crisis. Which would have been a farce had they succeeded.

Re: The U.S. Needs to Crack Down on White-Collar Crime

#65

Post by AnthonyMouse »

tialaramex wrote: post #23
tptacek wrote: post #3

Earlier quoted context omitted.

Isn't it already? Possibly even more so than drug task forces? https://www.nytimes.com/2016/02/07/your-money/vanguard-a-cha...

Maybe I lack relevant local knowledge (I am not a US citizen) but seems like this describes a situation where a government agency had discretion to perhaps do something legal but immoral back in 2016. Did they, in fact? That is, did the IRS tell Vanguard it owes a large new tax bill on a "transfer pricing" rationale? The UK's GAAR has this trick called a "double reasonableness test" which it uses to get rid of some t…

What this is really exposing is a facet of the sham of "transfer pricing" in general.

The problem with transfer pricing is that "market price" is a context-dependent volatile fiction. If you buy a jar of peanut butter, it might cost $2 at one store and $2.50 at another on the other side of town. Which one is the market price? The difference is 25%, which at scale is enough to consume most companies' entire profit margin. And the answer is both, because the less expensive one is on the outskirts of town and the other is in the center of town where rents are higher and you pay a premium for the convenience.

Which is one of the ways international companies avoid tax. You have a 10% profit margin internationally, so you overpay/underpay by 10% for everything from your sister company and make zero profit in the high tax jurisdiction, but the entire difference is within the "market price" margin of error. It's even possible to justify the difference by making note of some value add feature/service you did or didn't have that justifies a higher or lower price.

The entire concept is a farce because the error margins are larger than typical profit margins.

Which is how you get bizarre nonsense situations like this. If Vanguard is charging less than others had historically, are they charging less than the market price, or that just the new market price?

Re: The U.S. Needs to Crack Down on White-Collar Crime

#66

Post by nrb »

AnthonyMouse wrote: post #51
nrb wrote: post #38

Earlier quoted context omitted.

> It's possible that we could actually raise government income by doing less enforcement, because $3 is the average. It would be a net gain to eliminate the ones where we're spending $1 to raise $.50 (or $0) as long as we keep the ones where we spend $1 to raise $20. Keep in mind the likelihood that the enforcement actions we spend $1 to raise $0.50 are there to deter tens or hundreds of billions in related avoidance…

That's assuming those audits are actually deterring anything. The idea that significant numbers of people are looking at detailed IRS audit statistics before choosing to commit tax fraud is somewhat farfetched. Especially when they're still busting the largest offenders and offering huge bonuses to insiders for reporting fraud.

Viewing detailed statistics is unnecessary as long as it's well-established that the IRS is looking out for and prosecuting certain schemes.

Re: The U.S. Needs to Crack Down on White-Collar Crime

#67

Post by dragontamer »

cronix wrote: post #17
cozzyd wrote: post #13

Monetary fines are not enough deterrent in many cases. Even short stints in prison might be better.

I totally agree with this. Take the recent Tesla fiasco. Do you think a $20M fine means a damn thing to Musk? That's like $0.01 for most people. Now a $20M fine and a year in prison would make them think twice. More often than not, they make more in the commission of their crimes than they are fined, so they still come out in the black. In other words, they aren't truly punished.

> I totally agree with this. Take the recent Tesla fiasco. Do you think a $20M fine means a damn thing to Musk? That's like $0.01 for most people.

Elon Musk was forcibly removed as Tesla's chairman. That was the real punishment. Furthermore, Elon Musk agreed that two new board members would be selected by the SEC. Finally, Tesla promised that they'd watch Elon Musk's twitter account better.

The $20 Million was a slap on the wrist. The "real" punishment from the SEC were those new restrictions, which should clamp down on Musk's behavior.

----------

No one wants to see Tesla or Elon go bankrupt. The SEC just wants Elon to be more factual in his tweets. Neither jail nor fines help anybody.

IMO, the SEC should have threatened Elon Musk's CEO position a bit more (I mean... they could push him out of any officer position in publicly traded companies), but there's a strong argument that Tesla wouldn't survive if Elon were forced out.

Re: The U.S. Needs to Crack Down on White-Collar Crime

#68

Post by beautifulfreak »

drb91 wrote: post #6

Obligatory Chickenshit Club reference: https://books.google.com/books/about/The_Chickenshit_Club.ht...

Another important book is "The Best Way to Rob a Bank is to Own One." The author appeared on Bill Moyers Journal: https://www.pbs.org/moyers/journal/04032009/watch.html

Re: The U.S. Needs to Crack Down on White-Collar Crime

#69

Post by [deleted] »

AnthonyMouse wrote: post #56
buzer wrote: post #40

Earlier quoted context omitted.

It depends. Most (all?) antibiotics aren't sold without recipe. If they were and people started using them without good reason, we could end up in situation where there are no longer any effective antibiotics for the species (this is already the case to some degree, but accelerating it certainly isn't ideal).

When something has negative externalities, the answer isn't to ban it, it's to tax it in proportion to the pro rata share of the negative externalities (and then maybe waive the tax if you have a prescription; but maybe not -- they seem to be overprescribed as it is, and the negative externalities don't disappear when you have a prescription). If you want to pay $2000 for useless antibiotics, no problem. But the pric…

[deleted]

Re: The U.S. Needs to Crack Down on White-Collar Crime

#70

Post by harryh »

smadge wrote: post #60
harryh wrote: post #32

Earlier quoted context omitted.

"of yearly profit" is not the relevant comparison. What is relevant is the amount of money they made from the cartel money laundering. I am preeeeety confident that HSBC didn't make ~10% of it's profits from these transactions.

“Moreover, the dollar transfers earned HSBC hefty fees. The Senate investigation quoted an HSBC email lamenting how the bank would lose $2.6 billion in revenue from U.S. dollar accounts that it was forced to close because of the Mexico fiasco.” * First, apparently HSBC was making 2.6 billion USD (annual?) revenue from these accounts, and was fined 1.9 billion USD. Second, it is not a certainty that a company engaging…

1) 2.6B in revenue != 2.6B in profit. HSBC earns maybe 20% margins so we're talking about ~500M in revenue or far less than the fine.

2) Your point about expected value is well taken, but here you are saying something far different from what themagician said and I was objecting to.

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