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

Four Banks, Including JPMorgan, Fined in Europe Over ‘Cartel’ Behavior

dealbook.nytimes.com

Post reply on HN
Print view View original

31–40 of 70 posts

Re: Four Banks, Including JPMorgan, Fined in Europe Over ‘Cartel’ Behavior

#31

Post by leoc »

rayiner wrote: post #20

There are a lot of comments along the lines of "why are the fines so low" or "why is nobody doing jail time?" And the answer to both those questions is: stiffer punishment would require stronger proof. Cartel activity, like much white collar crime in general, is extremely difficult to prosecute, because the difference between totally legal conduct and illegal conduct comes down to what people are thinking. Instead of…

> Should Eric Schmidt be in jail for his role in the employee wage suppression collusion?

Er, why shouldn't he be? I can think of three main likely arguments why he shouldn't:

i) what he did breached civil but not criminal law: if so then obviously he shouldn't be in jail. I don't know whether that's the case though. I also don't know if he is personally liable for civil damages, and if so why he hasn't been chased for those. (And that's not going into the question of whether his actions should have been made criminal offences by law, and why they haven't been.)

ii) the higher standard of evidence in criminal prosecutions, the first issue you raised. This is of course a real issue in criminal cases, but—speaking as a non-lawyer, non-expert who hasn't been following the story very closely—the evidence on this matter doesn't look at all lacking to me. AFAICS, if Eric Schmidt had been discussing a murder rather than salary collusion in the communications discussed by http://www.businessinsider.com/apple-google-recruitment-emai... no-one would be likely to suggest that the evidence was too weak for a criminal prosecution.

iii) Eric Schmidt is a nice person like us, and jail isn't really for nice people like us. I hope the egregiousness and total unacceptability of this argument is clear to everyone without any need for explanation.

So, yes, why shouldn't Eric Schmidt be in jail?

As to the financial sector, while it is obviously difficult to prosecute many financial crimes, I am not convinced that this is the primary explanation for the shortage of convictions lately. I am reasonably convinced by the argument http://neweconomicperspectives.org/2014/10/liars-loans-aint-... that similarly complex cases were successfully prosecuted in the S&L scandal in the '80s, and that the primary difference between then and now is lack of resources and political will.

Re: Four Banks, Including JPMorgan, Fined in Europe Over ‘Cartel’ Behavior

#32

Post by Shivetya »

salesforce_wha wrote: post #12

I wish -- just once -- there would be a story where a bank is actually punished in a meaningful way. Look at this way: A bank is fined $x for doing an action which generated $y. If x The libor scandal cost the U.S. at least $6 billion in interest charges (y) and another $4 billion just to unwind their positions. Whereas the banks have only been fined $2.1 billion to date (x). When you take inflation into account and…

but in the end you are not punishing the bank, it merely is an entity with no physical means of being punished. To punish it you need to throw their boards into jail.

Fines are paid by share holders if any, hence is the bank punished? Not unless depositors leave in droves. You cannot fine a bank for its holdings as those are the funds and properties of other people, the bank is merely managing money for others.

if you attempt to dissolve a bank, who takes over the loans, how do you get the depositor funds back. You cannot confiscate them in the names of the state, the distress to the economy would be drastic.

In the end its back to the people running the show, put them in jail, or force them out, or fine them, or all of the above. However like politicians there are so many levels here than they are nearly immune to their actions

TL;DR

Monetary fines are irrelevant, punishing the people who run it is the only means to correct future behavior

Re: Four Banks, Including JPMorgan, Fined in Europe Over ‘Cartel’ Behavior

#33

Post by innguest »

arca_vorago wrote: post #29
rayiner wrote: post #20

There are a lot of comments along the lines of "why are the fines so low" or "why is nobody doing jail time?" And the answer to both those questions is: stiffer punishment would require stronger proof. Cartel activity, like much white collar crime in general, is extremely difficult to prosecute, because the difference between totally legal conduct and illegal conduct comes down to what people are thinking. Instead of…

My criticism of this view is that the proof is probably there, but the agencies responsible for obtaining it are likely corrupted as well. I'm not well versed in the intricacies of EU banking, besides the IMF/World Bank, but at least in the States, a good example of regulatory capture and corruption is the SEC. It's not that the proof isn't there, it's that the SEC itself has become corrupted by the people it's suppo…

> Why the hell is a rate set in London allowed to influence the American dollar so greatly?!

Because banks are not independent from each other, and they frequently borrow from each other if they lack a certain quantity of a certain currency.

The problem with the Libor scandal is that the bankers conspired to set interest rates by gaming the blind process they have for coming up with those rates in a fair way (all vote, top 4 and bottom 4 bids are removed, rest is averaged).

This is true, undeniable banking conspiracy at work. And governments still trust them with our money.

Re: Four Banks, Including JPMorgan, Fined in Europe Over ‘Cartel’ Behavior

#34

Post by phkahler »

rayiner wrote: post #20

There are a lot of comments along the lines of "why are the fines so low" or "why is nobody doing jail time?" And the answer to both those questions is: stiffer punishment would require stronger proof. Cartel activity, like much white collar crime in general, is extremely difficult to prosecute, because the difference between totally legal conduct and illegal conduct comes down to what people are thinking. Instead of…

Stronger proof? One of the banks turned in the others in exchange for immunity. You don't think there was any documentation? Perhaps email or witnesses? Your points about burden of proof may be valid, but your case for a lack of evidence is itself lacking evidence.

Re: Four Banks, Including JPMorgan, Fined in Europe Over ‘Cartel’ Behavior

#35

Post by cynicalkane »

arca_vorago wrote: post #29
rayiner wrote: post #20

There are a lot of comments along the lines of "why are the fines so low" or "why is nobody doing jail time?" And the answer to both those questions is: stiffer punishment would require stronger proof. Cartel activity, like much white collar crime in general, is extremely difficult to prosecute, because the difference between totally legal conduct and illegal conduct comes down to what people are thinking. Instead of…

My criticism of this view is that the proof is probably there, but the agencies responsible for obtaining it are likely corrupted as well. I'm not well versed in the intricacies of EU banking, besides the IMF/World Bank, but at least in the States, a good example of regulatory capture and corruption is the SEC. It's not that the proof isn't there, it's that the SEC itself has become corrupted by the people it's suppo…

My understanding is that the purpose of LIBOR is to be free of US regulations on interest-rate setting and be closer to a 'free market' rate on the USD. The irony of the situation is left as an exercise to the reader.

London is also a bit more reluctant to clamp down on finance--they are the only region doing well in a struggling England, and unlike, say, the NYC finance industry, much of the money in London is free to go somewhere else.

Re: Four Banks, Including JPMorgan, Fined in Europe Over ‘Cartel’ Behavior

#36

Post by penguindev »

misiti3780 wrote: post #26

If anyone is interested in learning more about why no one goes to jail, and banks dont even have to admit they did anything wrong, etc., I recommend you go pick up a copy of Matt Taibbi's new book "The Divide" He goes into great deal regarding why the most egregious white collar crimes such as HSBC laundering money for the Mexican cartels / terrorist organizations ended with a simple 1.9 billion dollar fine ( http://…

> this is nothing compared to the banks getting caught fixing the LIBOR rate a few years back

It's really nothing compared to the fact that banks can print trillions of dollars of credit out of thin air - and not go to jail for counterfeiting. Heck, counterfeiting used to be a capital offense in this country.

So the lesson is always: rules don't apply to rich people.

Re: Four Banks, Including JPMorgan, Fined in Europe Over ‘Cartel’ Behavior

#37

Post by salesforce_wha »

Shivetya wrote: post #32
salesforce_wha wrote: post #12

I wish -- just once -- there would be a story where a bank is actually punished in a meaningful way. Look at this way: A bank is fined $x for doing an action which generated $y. If x The libor scandal cost the U.S. at least $6 billion in interest charges (y) and another $4 billion just to unwind their positions. Whereas the banks have only been fined $2.1 billion to date (x). When you take inflation into account and…

but in the end you are not punishing the bank, it merely is an entity with no physical means of being punished. To punish it you need to throw their boards into jail. Fines are paid by share holders if any, hence is the bank punished? Not unless depositors leave in droves. You cannot fine a bank for its holdings as those are the funds and properties of other people, the bank is merely managing money for others. if yo…

Working under the assumption that: 1. The banks only care about one thing -- profits. 2. Individuals at the bank primarily only care about their pay (talking about the ones responsible for massive fraud and have bonus structures that encourage it, not the tellers at your local branch).

If government took actions to pull all revenue (plus some) generated by these schemes it could go a long way in changing the culture. It appears to me, and probably many others, that the punishment imposed (fines) are simply a cost doing business as the banks appear to still be making profits, or at the very least keeping large portions of revenue, off of illegal activity.

There is no simple solution, and this might be the wrong one, but the current solution doesn't appear to be working.

Re: Four Banks, Including JPMorgan, Fined in Europe Over ‘Cartel’ Behavior

#38

Post by nsajko »

bobcostas55 wrote: post #30
atirip wrote: post #5

There's no point whatsoever to fine banks, its stupid beyond belief. First, its like issuing a speeding ticket to a billionaire, second, the money does not come from the pocket of the offender, and third, if the unimaginable happens and some bank goes belly up because of this, then we, the taxpayers will bail it out. Again.

I think there's a very simple and elegant solution for this: fines have to be paid in the form of equity. The government can sell its share on the open market to convert equity to cash, and it's impossible for the shareholders to pass on the cost to anyone else.

That sounds quite interesting. Searching for it I only found some Scots parliamentary proposals. Is this a new idea?

Re: Four Banks, Including JPMorgan, Fined in Europe Over ‘Cartel’ Behavior

#39

Post by jgalt212 »

rayiner wrote: post #20

There are a lot of comments along the lines of "why are the fines so low" or "why is nobody doing jail time?" And the answer to both those questions is: stiffer punishment would require stronger proof. Cartel activity, like much white collar crime in general, is extremely difficult to prosecute, because the difference between totally legal conduct and illegal conduct comes down to what people are thinking. Instead of…

There's plenty of proof (maybe not in this particular) case, but in a lot of these cases to put people in jail, extract fines that are punitive (and not merely rounding errors), and at the very least pin the wrong doings on people (and not faceless companies).

My experience in the US (having worked directly with regulators) is that they are afraid to regulate. The literal tail is waggging the dog. As to the root cause of this (many blame the public/private revolving door), I am not entirely certain. I just wish in the US, at least, the regulators would not be such wussies and stand up for the consumer/voter and stop worrying about push back.

Re: Four Banks, Including JPMorgan, Fined in Europe Over ‘Cartel’ Behavior

#40

Post by grecy »

salesforce_wha wrote: post #12

I wish -- just once -- there would be a story where a bank is actually punished in a meaningful way. Look at this way: A bank is fined $x for doing an action which generated $y. If x The libor scandal cost the U.S. at least $6 billion in interest charges (y) and another $4 billion just to unwind their positions. Whereas the banks have only been fined $2.1 billion to date (x). When you take inflation into account and…

> Look at this way: A bank is fined $x for doing an action which generated $y. If x

Not only is there no incentive to stop, that's actually incentive to keep doing it, faster and on a bigger scale!

If you told me I'd get fined $10k for doing something that resulted in $15k of "earnings" (and no other penalty), I'd start a business and start hiring as many people as possible to do exactly that activity, profiting $5k every time.

Post reply on HN