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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)

#111

Post by jcranmer »

onlyrealcuzzo wrote: post #93
jcranmer wrote: post #33

Earlier quoted context omitted.

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.

Again, securities fraud has a pesky knowingly requirement. To my understanding, in most cases, the sellers themselves believed the securities to be far less risky than they actually were.

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

#112

Post by actually_a_dog »

rspoerri wrote: post #96
actually_a_dog wrote: post #62

Earlier quoted context omitted.

"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.

I'm not here to educate you; I don't want the downvotes I'd get from attempting to do so. I just want you to stop spreading misinformation.

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

#113

Post by dredmorbius »

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 primary underwriter of Marketplace has long been GE Capital. That is, the industry the programme is supposed to be watching, pays it.

It is not in the interest of the financial industry to support advocacy for strong regulation against itself.

https://idioms.thefreedictionary.com/He+who+pays+the+piper+c....

John Kenneth Galbraith's The Great Crash: 1929 gives interesting insights into prosecution and hearings following the Wall Street Crash which precipited the Great Depression and previous illegal and self-serving behaviours. I cannot recommend the book highly enough: it's short, highly readable, quite informative, and exquisitely researched.

https://www.worldcat.org/title/great-crash-1929/oclc/1222806...

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

#114

Post by missedthecue »

cm2187 wrote: post #100
kasey_junk wrote: post #61

Earlier quoted context omitted.

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.

Wachovia went under. So did Bear Stearns and WaMu.

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

#115

Post by AnimalMuppet »

actually_a_dog wrote: post #84
AnimalMuppet wrote: post #76

Earlier quoted context omitted.

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.)

Sorry, but I'm not in the mood to get flagged today. I cut it off with "crack a book," because if you go one more step down the road beyond that, that leads to something you can't discuss rationally on Hacker News.

Fine. Then I will. (Been downvoted plenty lately, what's some more?)

Socialism is social ownership of the means of production. It's not government healthcare. It's not government bailouts (unless the government keeps ownership of the businesses). It's not "government doing things". It's not government using taxes to pay for doing things. It's government owning the means of production, or else the people owning it in some other way (mandatory profit sharing would qualify).

Now, can we prove the parent wrong and have an actual, reasonable discussion?

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

#116

Post by pengstrom »

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.

It's hardly a coincidence that we're missing laws that would be useful in this case. The bankers and politicians are too similar for this to be probable.

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

#117

Post by taway2021s »

nickff wrote: post #110
mojomark wrote: post #90

Earlier quoted context omitted.

> You dont necessarily need to charge the Wall Street CEOs. You can charge the Senior Managing Director of Structured Products. You can delegate authority, not responsibility. This fundamental rule of hierarchical organizations is why CEO's need to be held accountable. CEO's are responsible for creating the environment, culture and rules that allow such activities to take place. Failure within an organization on a CE…

The problem is that it is impossible to delegate authority, but no responsibility. Realistically, the CEO of a large company cannot know everything that happens under the umbrella, much like the President of the USA cannot know what every government employees does. In both situations, some subordinates will inevitably commit crimes in the name of the organization (eventually), and holding the person at the top comple…

>> In both situations, some subordinates will inevitably commit crimes in the name of the organization (eventually), and holding the person at the top completely responsible is totally unreasonable.

My entire argument was that someone somewhere along the chain was indeed responsible and it doesnt have to be the CEO. Youre arguing that the CEO cannot be completely responsible, which totally sidesteps the 14 other layers of people responsible and also conveniently ignores the other 14 layers that could be held responsible, investigated, and prosecuted.

Fine, the CEO cant be responsible -- is absolutely no one responsible at all within the organization? If so, how did tens of billions of dollars of profits pour in? How can no one be responsible and yet the companies be so profitable?

Probably has something to do with the upper-crust NY culture where those at the SEC, NY Times, SD-DoJ, and Walls Street are all friends. It is also not surprising that the two individuals on whom most issues were hung were a French trader with a deep french accent and an Egyption desk head at a Swiss bank.

https://www.usatoday.com/story/money/business/2013/08/01/gol...

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

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

#118

Post by taway2021s »

paulpauper wrote: post #51

People tend to go to jail for malice (willful intent), not mistakes. The financial crisis was viewed as just a giant mistake in risk management. having a 20-sigma event when your financial model says it is an impossibility, is not a crime.

I love how 20-sigma events happen every 8-10 years on Wall Street. Sounds like no statistics I've ever seen.

Conveniently, money is extracted along the way in the form of generous fees, everyone apologizes for the thousand-year event they couldnt predict, and we repeat the cycle. People on the outside make excuses while those on the inside craft brilliant tales of hard work and rugged individualism.

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

#119

Post by pengstrom »

pwned1 wrote: post #77
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 ha…

It's almost as if there's a kernel of truth in the criticisms of capitalism. Incentives rule the world.

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

#120

Post by fsckboy »

vlovich123 wrote: post #27
KingMachiavelli wrote: post #10

FYI The actual article is audio/podcast. I skimmed through it and it was considered more effective to go after individuals by civil suite. My personal understanding is a lot that the fraud was widespread among low level mortgage officers (not sure if that's the right word) who were doing things like exagerating a loan applicants income, assets, etc. These individuals may or may not have known the extent of their crim…

When it's a handful of people, you go after the individuals. When it's wide spread, you go after the institution [1]. The challenge is that the DOJ appears to continue to insist on going after white collar crimes like these with civil penalties against the company rather than piercing the corporate veil & starting to criminally prosecute the officers responsible. Talk about moral hazards they're constantly hand wring…

"piercing the corporate veil" generally refers to going after owners/shareholders or their assets, rather than going after employees; that's the level of liability that a corporation protects.

IANAL so I'm not sure what level of legal "protection" employees have vs managers etc. for which levels of crimes (obviously, the janitor is not allowed to shoot people, while the accountant's assistant is not going to bear the brunt of some fraud)

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