> to practise banking, one needs a license, which can be revoked. Most banks are "too big to fail".
No. In the US, ant any given time the fed nominates about 10 banks that are “too big to fail”. There are hundreds of banks in the US and a couple fail every year. An interesting question is should the fed use that distinction at all? And if so should it be removed as a penalty for bad behavior.
Maybe the statement should rather be "most banks racking up billions in fines are too big to fail". Wells Fargo certainly is.
My other suggestion is that to practise banking, one needs a license, which can be revoked. Now that I think of it, Taleb's suggested that banking should be a civil servant job. So, no financial engineering or bonuses, just boring paperwork. In the wake of the financial crisis of 2008 (IIRC), the role of regular banking and hedge fund activities was split in two. The idea is, of course, that if all the fancy derivati…
> In the wake of the financial crisis of 2008 (IIRC), the role of regular banking and hedge fund activities was split in two. This thing comes and goes in waves. IIRC the requirement that retail banking and proprietary trading not be mixed was already part of the Glass-Steagall Act that came in the wake of the great depression. Clinton repealed it, which somehow played a role in the Citigroup-Salomon Brothers merger.…
> Clinton repealed it
Hadn’t realised he was taking a break from the presidency and interning for the Republican Party at the time.
(The repeal was of course a Republican bill with voting more or less along party lines…)
> That's not how pensions, ETFs, index funds or pretty much anything works. Yes, it's exactly how that stuff works. Why is it not the pension managers responsibility to make sure his clients are not invested in these things if there is financial risk? Or, if you decide to invest in a market-wide ETF, you are explicitly choosing to take the bad with the good. I love how people think you can outsource decision making t…
> Why is it not the pension managers responsibility to make sure his clients are not invested in these things if there is financial risk? That's the problem, there is no financial risk, check out Wells Fargo stock price. These are social problems these companies are spinning off, any financial problems are externalized. > I love how people think you can outsource decision making to absolve yourself of responsibility.…
When you sign up for someone (like a pension plan, and yes, it's a choice) to manage your money, you can't pick and choose individual stock. Just like when you go to a restaurant, you can't order them to go and buy a different kind of carrots because you have a major problem with what kind of carrots they use. However, money managers do have their metrics they are held up to, and if they generally don't perform, they get fired. At some point, a decision was made to work for an organization that compensates their employees via a pension plan vs. for example taking a salary and picking individual stocks personally, that is presumably a free will decision just like when I choose to get my food at a restaurant, I give up my option of picking every single ingredient in my food.
> We demand individuals to do pointless self flogging rituals like tediously organizing their recycling just to have it be buried in china. German here. It's not that hard to separate paper, glass, metal, plastics and remainder waste. Paper, glass and metal are recycled at very high rates (over 80% for paper and glass [1][2] and over 90% for metal), and the separation between plastics and remainder waste allows trash…
In America we do things differently. We carefully organize our recycling but instead of it being recycled it is sent to China, who extracts the tiny amount of value it can from it, and then buries or dumps the rest in the ocean. There’s some nice articles about it. I’m stupid enough that I still performatively wash out the glass and aluminum so the workers in China have to do less. But what is a West coast American i…
I thought you were joking, then I looked up numbers, and WTF, y'all only recycle 33% of your glass [1] and barely half of your soda drink cans [2].
Why compare to gross profit rather than profit (net income)? I.e. why ignore fixed costs for this comparison?
Aren't fines deducted from net profit?
Fines would be part of the expenses that go into calculating net profit.
But a business like Wells Fargo with lots of physical locations and staff has a lot of fixed costs. Their operating profit is $80B, but net profit is $20B.
I do not see a reason to ignore $60B of expenses when comparing fines to a measure of the business’s performance.
Some of us don’t have a choice. I got a mortgage from a local bank. One week after we closed I got a letter that WF now owns my mortgage, and I can send future payments to them.
That’s terrible. My wife banks there and has done so before we got married. It’s a spot of contention for us since she wants us to merge accounts and I don’t want to for obvious reasons.
I like the idea of prison time but that's only going to happen with an impartial legal system that treats everyone the same; regardless of wealth, upbringing or Ivy League attendance among others. In the meantime how about fining companies so much that the bank will become insolvent if they don't give a crap and passing laws (if they don't exist already) to force a halt in trade for x-days/weeks?
I think the banking industry is already very heavy regulated since 2008. In fact these regulations are (in my limited experience) at least as bad for the consumer as for the banks. Dealing with banks in general since 2008 has been a huge pain in the ass, and it's not really the bankers' faults (other than the huge debacles that led to regulation). Better to just let the banks doing stupid risky crap fail instead of e…
>Dealing with banks in general since 2008 has been a huge pain in the ass,
In which ways? I cannot say I have noticed any difference pre and post 2008. If anything, the CFPB which was established after 2008, helped save me a ton of time and effort when I could not easily get a hold of a bank employee who could resolve my issue.
> In the wake of the financial crisis of 2008 (IIRC), the role of regular banking and hedge fund activities was split in two. This thing comes and goes in waves. IIRC the requirement that retail banking and proprietary trading not be mixed was already part of the Glass-Steagall Act that came in the wake of the great depression. Clinton repealed it, which somehow played a role in the Citigroup-Salomon Brothers merger.…
> Clinton repealed it Hadn’t realised he was taking a break from the presidency and interning for the Republican Party at the time. (The repeal was of course a Republican bill with voting more or less along party lines…)
...sorry, just recounting something from memory I had read a long time ago, with the original source unavailable to me right now. Maybe the original had some bias, or I misremembered or something.
Fines would be part of the expenses that go into calculating net profit. But a business like Wells Fargo with lots of physical locations and staff has a lot of fixed costs. Their operating profit is $80B, but net profit is $20B. I do not see a reason to ignore $60B of expenses when comparing fines to a measure of the business’s performance.
Fair enough
(Or 'touche' or 'I see the validity of your argument' hard to communicate tone through text especially with a multi-lingual userbase)