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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)

#91

Post by cm2187 »

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…

Because they are market makers. They routinely trade low credit quality instruments that they wouldn't buy and hold in large volumes. The fact that they don't have the credit appetite to hold that position doesn't mean they can't make a market for it.

It's like if you were telling your car salesman that if he doesn't own a couple of Toyota Yaris himself, you wouldn't trust him to buy a Toyota Yaris from his dealership. He's a dealer, what he thinks of the car personally isn't the question.

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

#92

Post by onlyrealcuzzo »

kasey_junk wrote: post #26
actually_a_dog wrote: post #17

Earlier quoted context omitted.

How about we start with massive amounts of loan fraud? https://themreport.com/daily-dose/12-08-2020/the-role-of-len...

Worth noting that if you were going to go after loan fraud you likely would be charging low level folks in the mortgage pipeline (appraisers, mortgage brokers, etc) or even the borrowers, not Wall Street CEOs.

This sounds very Mafia-esque.

We created RICO to convict the Mafia. Not sure why we can't create a new type of crime to hold financial companies responsible for massive fraud.

I mean - we already have Securities Fraud - for which bank CEOs should be held accountable. I'm not sure how they escaped from that.

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

#93

Post by onlyrealcuzzo »

jcranmer wrote: post #33
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 closest general-purpose crime I can think of would be some variation of fraud. Except that to be criminally fraudulent, you have to meet the requirement of knowingly making false statements of fact. That's quite difficult for the prosecution to prove in a criminal trial, especially given that the bar is to prove it beyond a reasonable doubt (although I doubt that juries actually adhere to that standard in practic…

How wasn't this blatantly securities fraud? That's already a crime. And they're already supposed to be accountable for that.

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

#94

Post by Aunche »

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…

That "low level fall guy" made $1.7 million in 2007. Unless if there was evidence that the higher ups at Goldman knew that Tourre was defrauding investors, but chose to ignore that evidence, I don't see how they can convicted of a crime.

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

#95

Post by cm2187 »

jollybean wrote: post #18
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 .

Yes, it's bad populism to talk about crimes and then never bother to explain them. There's nuance in explaining systematic failure, but not one that most people couldn't grasp if well written in a few paragraphs. A lot of 'small bad decisions' at the loan level encouraged by an aggressive culture, a failure in ratings, and CEO's to mild to look too intently into the VP Retail Banking's mortgage profits ... and the wh…

If we started putting politicians in jail for bad economic policies...

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

#96

Post by rspoerri »

actually_a_dog wrote: post #62
rspoerri wrote: post #50

Earlier quoted context omitted.

just because you say doesnt make it right. If you know so much better, you would be able to write down what it is instead. maybe read jcranmer's response above. citing him: "government provision of services (are) a hallmark of socialism"

"You keep using that word. I do not think it means what you think it means." * Inigo Montoya

i'd love to hear your side, but i have to assume there is none from your explanation.

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

#97

Post by cm2187 »

AlexandrB wrote: post #14
nickff wrote: post #8

These stories all seem to ride on similar popular sentiments: 'bad things happened, and rich people were involved, so they should go to jail'. Having read a few of the books cited at the bottom, I have been repeatedly surprised at how these financial disasters came to be; it often seems like the people at the top were deceiving themselves more than anyone else. Bethany McLean's other book, "The Smartest Guys in the R…

In many other jobs, gross negligence resulting in billions of dollars of property damage can get you jail time. Why is it ok for the people at the top of these financial disasters to be immune? Whether they're deceiving themselves is irrelevant. Drunk drivers deceive themselves about their ability to drive safely, we still put them in jail.

You mean like incompetent programmers who leak millions of records of personal information? When is the last time one went to jail for that?

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

#98

Post by spoonjim »

There are three ways corporate America protects its executives from jail:

1) they allow their low level people to do the dirty work. They say “compensation will be a percentage of your sales” knowing what will happen, and put the disclaimers in a required training class that you can click though in 10 seconds.

2) they diffuse responsibility over a large set of companies with complicated ownership and partnership relationships

3) the Department of Justice never seems to extract the maximum punishment they can. They settle out of court for money, while bloodthirsty juries might happily hand down a 30 year sentence.

The effect is that the tycoons know they can get away with anything. Look at the recent Sackler family message that they would reject the paltry $4.5 billion settlement if they were not indemnified from other lawsuits. That’s the act of a party with a good alternative, not a party begging for his life while the crowd erects a gallows.

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

#99

Post by nobody9999 »

notabanker wrote: post #28
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 article assumes knowledge of facts surrounding the financial crisis. There's plenty written elsewhere about that. Here's a sampling of books and blogs to comprehend what led to the Great Financial Crisis. * Griftopia by Matt Taibbi * https://www.rollingstone.com/politics/politics-news/the-9-bi... * https://jpmadoff.com/ * https://wallstreetonparade.com

Here's some more for you too:

https://www.thisamericanlife.org/355/the-giant-pool-of-money (text transcript: https://www.thisamericanlife.org/355/transcript )

https://www.thebalance.com/what-caused-the-subprime-mortgage...

https://www.reuters.com/article/us-how-aig-fell-apart/how-ai...

https://finecoiitg.wordpress.com/2018/08/16/credit-default-s...

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

#100

Post by cm2187 »

kasey_junk wrote: post #61
gfiorav wrote: post #49

It's astonishing how banks (saved with your money) can go home scotch-free, and hedge funds (that will die for their recklessness) get all the blame. You see this through policy. Why ban short selling? It's really dumb if you ask me. The banker investors that are used to taking risk and not caring precisely becuase they get their comission and the bank is saved (too big to fail) are the irresponsible people here. A h…

Lehman Brothers, a bank founded in 1847 and the very epitome of investment bank, went out of business and was not bailed out due to the 2008 events.

Nor was it a bank. It was a broker dealer, no banking license.
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