Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

bloomberg.com

Post reply on HN
Print view View original

81–90 of 140 posts

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

#81

Post by shadowxs76 »

harryh wrote: post #44
csdreamer7 wrote: post #39

Earlier quoted context omitted.

Please read the second paragraph again. Where they didn't even bring charges for an unrelated crime of financing terrorism that they found out later. That was my answer to your question.

Well that again isn't an example of someone being caught and receiving a penalty lower than the gain from the crime. I don't know why the justice department didn't pursue charges here. Maybe HSBC wasn't guilty? Maybe there wasn't sufficient evidence to win? Who knows. But this isn't an example of a caught party with a "so low that they don't matter" penalty.

I would strongly suggest watching the Netflix documentary "Dirty Money" series episode on the HSBC/Mexican cartel fiasco. It goes into many of the details of how it went down and how it was discovered.

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

#82

Post by dragontamer »

sokoloff wrote: post #72
dragontamer wrote: post #67

Earlier quoted context omitted.

> 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…

After his “Naughty by Nature” and “Shortseller Enrichment Commission” tweets, do you believe that his twitter behavior has been curbed effectively? I guess, neither of those are blatant securities fraud or libel against a person, so maybe it has, but...

> After his “Naughty by Nature” and “Shortseller Enrichment Commission” tweets, do you believe that his twitter behavior has been curbed effectively?

Obviously not yet. But if Tesla fails to curb Elon Musk, I'd expect the SEC to continue to clamp down.

Remember: Tesla's settlement was to agree to clamping down on Musk's tweets. If Tesla violates that, then SEC can bring down the hammer again.

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

#83

Post by shadowxs76 »

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…

My take on legal punishment of banks that commit these sorts of frauds: the only method of punishment that strikes me as likely to actually make them feel the pain of their acts is to also pursue indictment of specific executives that knowingly allowed activity that was very evidently shady to continue. Multimillion and multibillion dollar fines levied against giant corporations are ineffective for the very reasons stated above by others, they're proportionally absurd for these kinds of corporate actors and the costs of these fines are mostly an abstraction (no one bank executive or group of them really feels the drain from their own pocket) that most likely get subtly passed onto customers anyhow.

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

#84

Post by gpm »

harryh wrote: post #70
smadge wrote: post #60

Earlier quoted context omitted.

“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.

You can't just apply the margin like that. You have to estimate the marginal cost of the extra business.

For something like banking I'm fairly certain that the marginal cost is tiny. It takes a lot of money to setup all the systems needed for moving money around, but once they are in place the difference between 10b and 11b flowing through them is tiny. As such HSBC probably pocketed most of that revenue.

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

#85

Post by telchar »

jjeaff wrote: post #78
pjc50 wrote: post #14

Well, yes: if you leave enough crime by the well-connected alone for long enough, in a country with poor election integrity and unlimited campaign finance spending, then you get a country run by gangsters. It came about pretty rapidly in Russia where there was no established democracy to displace.

While there have recently been some issues with some elections in the US, we definitely don't have an "election integrity" issue. There is very little evidence that any elections in the US have been affected by fraud by any significant amount.

To be fair, there is also a significant lack of evidence that they haven't. It is difficult to collect data in this area because of the setup of the electoral system (both its federated nature and the lack of possible verification of individual votes). This together with the tight margins of modern American elections means potentially significant fraud could hide in the noise. In-person fraud would be hard to hide but electronic fraud is possible and there are interested, capable parties out there (e.g Russia) who shouldn't be discounted.

So to say that 'we definitely don't have an "election integrity" issue' isn't correct. There is nothing definite about it - we just have a consensus that we don't have a problem. You could say the same about every data security breach until they were discovered. I have noticed that there is a significant cultural interest in propagating the idea that our elections are sound so I tend to take the idea with a grain of salt as long as our system is as vulnerable as it is.

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

#86

Post by cowkingdeluxe »

jjeaff wrote: post #78
pjc50 wrote: post #14

Well, yes: if you leave enough crime by the well-connected alone for long enough, in a country with poor election integrity and unlimited campaign finance spending, then you get a country run by gangsters. It came about pretty rapidly in Russia where there was no established democracy to displace.

While there have recently been some issues with some elections in the US, we definitely don't have an "election integrity" issue. There is very little evidence that any elections in the US have been affected by fraud by any significant amount.

There are many ways to negatively affect election integrity, both illegal and legal.

For example, in Georgia, US, one of the candidates himself blocked 53,000 voter registrations just 3 weeks before the election. The demographics of the 53,000 is 70% black.

https://www.npr.org/2018/10/13/657109536/georgia-puts-53-000...

Gerrymandering, strict voter id laws (e.g. requiring drivers license but removing all but one DMV in the entire county in opponent's strongholds) and similar are also various ways to negatively affect election integrity.

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

#87

Post by AnthonyMouse »

munin wrote: post #71
AnthonyMouse wrote: post #56

Earlier quoted context omitted.

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…

Cigarettes are legal and people still smuggle and sell them on the black market to avoid paying taxes. Your scheme would be mostly indistinguishable from the current prohibition and would still be dominated by cartels and SWAT teams.

> Cigarettes are legal and people still smuggle and sell them on the black market to avoid paying taxes. Your scheme would be mostly indistinguishable from the current prohibition and would still be dominated by cartels and SWAT teams.

Then where are the cartels and SWAT teams in the black market for cigarettes? The difference in the level of violence is stark. And most of the cigarettes on the market are sold through legal channels.

Failing to eliminate 100% of all crime is hardly an indictment of a significant improvement from the status quo.

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

#88

Post by anonymous5133 »

liftbigweights wrote: post #64
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…

FYI, for others reading. You can watch the abacus documentary in the link below. I highly recommend it as well. Well worth the 90 mins for sure.

https://www.pbs.org/video/abacus-small-enough-to-jail-suqmxe...

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

#89

Post by themagician »

DrJokepu wrote: post #79
themagician wrote: post #10

You'd have to completely reframe the penalty for crimes to be percentage based instead of fixed amounts. Even when caught the penalties are often so low that they don't matter, so white collar criminals go right back to it. When you can routinely make $10 million doing something a $1 million fine the one time you get caught just isn't a big deal. The cost-benefit analysis almost always favors the criminal for white c…

A percentage of what though? A percentage of unlawfully obtained income or a percentage of personal wealth, whether or not it’s connected to any unlawful activities?

Total assets.

If all you lose is the income from illegal activity and a small fine it’s not much of a penalty now is it? The criminal justice system needs to be as vicious against criminals as collection agencies are against poor people.

I really have no problem seizing absolutely everything from somone who manipulates markets or defrauds investors. In fact, step it up. Seize everything and stick them with a lifetime of debt that can’t be discharged.

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

#90

Post by AnthonyMouse »

nrb wrote: post #66
AnthonyMouse wrote: post #51

Earlier quoted context omitted.

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.

Well-established in what?

This is one of those things the media is profoundly stupid at. For example:

> Johnston and her coauthor, Andrew Joy, BS, also of Western New Mexico University, reviewed data on mass shootings amassed by media outlets, the FBI and advocacy organizations, as well as scholarly articles, to conclude that “media contagion” is largely responsible for the increase in these often deadly outbursts.

https://www.apa.org/news/press/releases/2016/08/media-contag...

In other words, widespread media coverage of mass shootings has increased the number of mass shootings, because the perpetrators do it for the attention and seeing how much attention it gets encourages future perpetrators. So now the media does its level best not to inflame the public and give unnecessary publicity to these monsters.. or not.

It's the same kind of thing here. The deterrent effect you're looking for comes from people talking about the major tax evasion cases the IRS is winning. It gets reduced by publicly lamenting a lower enforcement budget -- which would have no effect on deterrence if nobody was talking about it.

It's way more important that people understand that the IRS is prosecuting people than whether the actual number of people they're prosecuting goes up or down. And they definitely still are.

Post reply on HN