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Why didn’t any Wall Street CEOs go to jail after the financial crisis? (2019)

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Re: Why didn’t any Wall Street CEOs go to jail after the financial crisis? (2019)

#71

Post by jdavis703 »

taway2021s wrote: post #31
bawolff wrote: post #5

Articles like this never seem to make the case for which crimes were specificly commited. They always talk about the fallout of the financial crisis (losing money on wall street isnt a crime afaik). Idk much about this topic, so im sure crimes could be involved, but its weird how these articles dont start with why didn't someone go to jail for .

Sure. Lets start with an easy example. Why didnt any Directors at Goldman Sachs serve prison time for knowingly bundling Synthetic CDOs with bad CDS that they internally know were garbage? They sold these to pension funds, and other public entities. There were documented losses. There are documented emails with full internal discussion on how bad these investments were. (documented with emails.) Note there was a civi…

Selling bad assets isn’t illegal. I worked for a startup. After seeing how the sausage was made I knew they were a bad company. When they IPO’ed I sold all shares as soon as the lockup hit. They have yet to exceed the price I sold at. Should I be in jail for selling what I knew was a crappy, over-valued company?

(Mind you I had no MNPI as I hadn’t worked there for 6 years.)

Re: Why didn’t any Wall Street CEOs go to jail after the financial crisis? (2019)

#72

Post by [deleted] »

taway2021s wrote: post #65
spamizbad wrote: post #56

Earlier quoted context omitted.

The message that was drilled into people during the financial crisis was: punishing people for these actions would stifle innovation and risk taking in the financial services, which could threaten US financial hegemony.

There is a pretty clear line between innovation, risk taking, and fraud. Intent can be shown based on firms' internal positions and emails (e.g., Goldman Sachs was internally short these products and make a lot of money both by selling the bad products, and then again on their bet against the products.: https://www.nytimes.com/2009/12/24/business/24trading.html ) They were taking toxic waste, putting it into cleanly…

[deleted]

Re: Why didn’t any Wall Street CEOs go to jail after the financial crisis? (2019)

#73

Post by NovemberWhiskey »

taway2021s wrote: post #65
spamizbad wrote: post #56

Earlier quoted context omitted.

The message that was drilled into people during the financial crisis was: punishing people for these actions would stifle innovation and risk taking in the financial services, which could threaten US financial hegemony.

There is a pretty clear line between innovation, risk taking, and fraud. Intent can be shown based on firms' internal positions and emails (e.g., Goldman Sachs was internally short these products and make a lot of money both by selling the bad products, and then again on their bet against the products.: https://www.nytimes.com/2009/12/24/business/24trading.html ) They were taking toxic waste, putting it into cleanly…

Are you suggesting it's fraud to try to sell something for more than you think it's worth?

Re: Why didn’t any Wall Street CEOs go to jail after the financial crisis? (2019)

#74

Post by ryandrake »

nickff wrote: post #53
ryandrake wrote: post #34

Earlier quoted context omitted.

I think the sentiment is more "The rich have created this financial system that's essentially a giant casino, where if they make a bet and are right, they profit, and if they make a bet and are wrong, the general public loses their jobs and 401(k)s while the government pays to bail them (the rich) out. The fact that none of it appears to even be criminal is just icing on the cake and shows who the law really protects…

> "If none of the actions that caused all that misery are actually crimes, that's the problem. " Why? Why should the stock market be further de-risked? Why should the government's poor impulse control be encouraged? Why should mistakes be criminalized?

I didn't say anything about the stock market. Reckless decisions made by rich banks and financiers should not effect anyone but themselves, let alone cause economy-wide crises that hurt regular people.

Could you imagine if I went off to Macau to play a high stakes game of poker, lost, and as a result, you lost your job and the government staked me in my next poker game? That's pretty much what happened.

Re: Why didn’t any Wall Street CEOs go to jail after the financial crisis? (2019)

#75

Post by actually_a_dog »

kasey_junk wrote: post #48
actually_a_dog wrote: post #29

Earlier quoted context omitted.

Not at the scale noted in the article I linked: > Mortgage originators that emphasized profit-fueled quantity over loan quality, which resulted in the misreporting of key financial information in 48% of loans securitized by nongovernment agencies; If 48% of your company's financial transactions were fraudulent, would you expect the CEO to bear responsibility for that? At that point, I'd expect to see a RICO case, or…

I probably would but proving that they acted _criminally_ would be hard. You can’t just wave your hands and make up a law they broke. Meanwhile, that number likely means that the borrowers lied on those same applications. That’s where the fraud actually occurred. And would be easy to prove.

I told you the law: RICO.

> The Racketeer Influenced and Corrupt Organizations (RICO) Act is a United States federal law that provides for extended criminal penalties and a civil cause of action for acts performed as part of an ongoing criminal organization. The RICO Act focuses specifically on racketeering and allows the leaders of a syndicate to be tried for the crimes they ordered others to do or assisted them in doing, closing a perceived loophole. For example, before RICO, a person who instructed someone else to murder could be exempt from prosecution because they did not personally commit the crime.[1]

https://en.wikipedia.org/wiki/Racketeer_Influenced_and_Corru...

Re: Why didn’t any Wall Street CEOs go to jail after the financial crisis? (2019)

#76

Post by AnimalMuppet »

actually_a_dog wrote: post #67
InitialLastName wrote: post #64

Earlier quoted context omitted.

The government pooling resources (collected from the people) to control an industry (either by mandate or by providing an option that out-competes the private sector) for the benefit of the people is socialism. An industry collapsing and telling the government "give us money with no strings attached or we'll take the economy down with us" is a hostage crisis.

Nationalizing industries is also not socialism.

You know, you keep saying what socialism isn't. I agree with you that rspoerri's definition is too expansive, but we could have a more useful discussion if you supplied a definition, instead of just saying "no, that isn't it". (And "crack a book" isn't a definition.)

Re: Why didn’t any Wall Street CEOs go to jail after the financial crisis? (2019)

#77

Post by pwned1 »

bawolff wrote: post #5

Articles like this never seem to make the case for which crimes were specificly commited. They always talk about the fallout of the financial crisis (losing money on wall street isnt a crime afaik). Idk much about this topic, so im sure crimes could be involved, but its weird how these articles dont start with why didn't someone go to jail for .

The problem was that everyone was in on it. I spoke to quite a few people in that time period, from mortgage brokers to borrowers to bankers. They all knew what was happening. A friend tried to sell me on getting a NINJA loan (No Income, No Job, No Assets) where, I was told "just tell them any number for your income on the application." It was all done with a wink and nod and everyone in the pipeline knew what was happening.

When there's a collective acquiescence to large-scale fraud, who gets thrown in the clink? The bigger question should be how did the sytem evolve to the point where all of this was made possible?

Re: Why didn’t any Wall Street CEOs go to jail after the financial crisis? (2019)

#78

Post by toomuchtodo »

NovemberWhiskey wrote: post #73
taway2021s wrote: post #65

Earlier quoted context omitted.

There is a pretty clear line between innovation, risk taking, and fraud. Intent can be shown based on firms' internal positions and emails (e.g., Goldman Sachs was internally short these products and make a lot of money both by selling the bad products, and then again on their bet against the products.: https://www.nytimes.com/2009/12/24/business/24trading.html ) They were taking toxic waste, putting it into cleanly…

Are you suggesting it's fraud to try to sell something for more than you think it's worth?

It's fraud to materially misrepresent a security [1].

EDIT: In Goldman's case (from the URL citation):

Goldman Sachs - SEC charged the firm with defrauding investors by misstating and omitting key facts about a financial product tied to subprime mortgages as the U.S. housing market was beginning to falter. (4/16/10)

Goldman Settled Charges - Firm agreed to pay record penalty in $550 million settlement and reform its business practices. (7/15/10)

Fabrice Tourre (mentioned above) Found Liable - A jury found former Goldman Sachs Vice President Fabrice Tourre liable for fraud relating to his role in a synthetic collateralized debt obligation tied to subprime residential mortgages. (8/1/13)

A U.S. judge ordered former Goldman Sachs Group Inc trader Fabrice Tourre to pay more than $825,000 after a jury found him liable for defrauding investors in a subprime mortgage product that failed during the financial crisis.

[1] https://www.sec.gov/spotlight/enf-actions-fc.shtml

Re: Why didn’t any Wall Street CEOs go to jail after the financial crisis? (2019)

#79

Post by rspoerri »

actually_a_dog wrote: post #22
rspoerri wrote: post #13

The worst thing is, that the core of capitalism had to be rescured by socialism. Not that socialism is bad, or capitalism is bad. But the core of capitalism stand on, what isnt profitable, isnt sustainable. The system hasnt been provitable, but had been rescured by all the goverments and the money they gather from the inhabitants.

Socialism is not when the government does stuff.

Below are some of the key tenets of socialism:

1. Public or collective ownership of the means of production

2. Central planning of the economy

3. Emphasis on equality and economic security

4. Goal of reducing class distinctions

( from: https://www.investopedia.com/articles/investing/082014/what-... )

And what happened?

1. The goverment decided to bail the banks, the goverment is _the_ public institution.

2. It was central planning "preventing the world economy from crashing" that lead to this decision.

3. not really equality, but economic security was one of the reasons.

4. ... no thats doesnt apply to the banks bailout.

Re: Why didn’t any Wall Street CEOs go to jail after the financial crisis? (2019)

#80

Post by taway2021s »

NovemberWhiskey wrote: post #45
taway2021s wrote: post #36

Earlier quoted context omitted.

You dont necessarily need to charge the Wall Street CEOs. You can charge the Senior Managing Director of Structured Products. Or MD of Structured Products banking/trading/risk/whatever. There were plenty of individuals who set policy to enable this. No need for a scarecrow argument about CEO or bust. I could literally look thru Linked In or a Bloomberg Terminal and figure out who the responsible parties are. Too bad…

> You can charge the Senior Managing Director of Structured Products ... like Kareem Serageldin. Who went to prison.

https://en.wikipedia.org/wiki/Kareem_Serageldin

He was literally the ONLY single person who did.

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