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

dealbook.nytimes.com

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

#41

Post by tomp »

leoc wrote: post #31
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 f…

> 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.

One of the primary explanations is that banks have become "too big to fail", and if you criminally charge a bank, you effectively make it fail. Basically, banks are powerful enough to get away with murder.

http://www.theguardian.com/business/2012/dec/11/hsbc-fine-pr...

"Had the US authorities decided to press criminal charges, HSBC would almost certainly have lost its banking licence in the US [...] The bank processed cash for Mexico's Sinaloa cartel, regarded as the most powerful and deadly drug gang in the world, among others."

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

#42

Post by bobcostas55 »

nsajko wrote: post #38
bobcostas55 wrote: post #30

Earlier quoted context omitted.

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?

I just came up with it, but it's pretty obvious so I'm sure it's highly unoriginal.

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

#43

Post by leoc »

tomp wrote: post #41
leoc wrote: post #31

Earlier quoted context omitted.

> 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 f…

> 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. One of the primary explanations is that banks have become "too big to fail", and if you criminally charge a bank, you effectively make it fail. Basically, banks are powerful enough to get away with murder. http://www.theguardi…

That doesn't explain the non-prosecution of individual bank employees and officers though. In fact, if one accepts the TBTF argument, then the prosecution of individuals becomes even more important: because it is still perfectly possible to prosecute individual members even if the institution is (we assume for the sake of argument) untouchable, then it is the only way remaining to restrain the behaviour of the institution.

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

#44

Post by enraged_camel »

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…

>>Understandably, banks aren't the most sympathetic defendants, but extrapolate this reasoning to the tech industry. Should Bill Gates be in jail for his role in the Microsoft antitrust activity? Should Eric Schmidt be in jail for his role in the employee wage suppression collusion?

Yes, and yes. They committed crimes, didn't they?

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

#45

Post by misiti3780 »

penguindev wrote: post #36
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.

agreed - but a small point - the banks printing money are really basically government entities (the federal reserve, ECB, etc). the banks the article + book are talking about are private entities committing serious fraud and not getting being prosecuted for it.

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

#46

Post by dragonwriter »

enraged_camel wrote: post #44
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…

>>Understandably, banks aren't the most sympathetic defendants, but extrapolate this reasoning to the tech industry. Should Bill Gates be in jail for his role in the Microsoft antitrust activity? Should Eric Schmidt be in jail for his role in the employee wage suppression collusion? Yes, and yes. They committed crimes, didn't they?

Neither has been charged (much less convicted by evidence showing guilt beyond a reasonable doubt) with any crime, and most crimes don't require incarceration on conviction (and even when they do, there are pardon/clemency provisions in the law specifically because of a societal decision that even guilt of a crime that, on the books, requires a certain punishment does not always meet the needs of society), though most crimes include incarceration as a potential punishment. So, it is neither is it well established that either committed any crime, nor is it the case that "X committed a crime" (without additional information about the particular crime and circumstances) is sufficient to establish "X should be in jail".

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

#47

Post by bnegreve »

nsajko wrote: post #38
bobcostas55 wrote: post #30

Earlier quoted context omitted.

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?

Nationalization is the extreme example. It happened a couple of times [1]

[1] http://en.wikipedia.org/wiki/Nationalization

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

#48

Post by toomuchtodo »

tomp wrote: post #41
leoc wrote: post #31

Earlier quoted context omitted.

> 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 f…

> 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. One of the primary explanations is that banks have become "too big to fail", and if you criminally charge a bank, you effectively make it fail. Basically, banks are powerful enough to get away with murder. http://www.theguardi…

> One of the primary explanations is that banks have become "too big to fail", and if you criminally charge a bank, you effectively make it fail. Basically, banks are powerful enough to get away with murder.

So give the FDIC more power and a larger fund to draw on for bank failures. They already handle bank failures very very well, they'd be fantastic at spinning down banks accused and convicted of criminal activities.

We dismantled Arthur Anderson for their complacency in the Enron criminial enterprise. Why not banks?

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

#49

Post by penguindev »

misiti3780 wrote: post #45
penguindev wrote: post #36

Earlier quoted context omitted.

> 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.

agreed - but a small point - the banks printing money are really basically government entities (the federal reserve, ECB, etc). the banks the article + book are talking about are private entities committing serious fraud and not getting being prosecuted for it.

I disagree about the federal reserve being a government entity. It's owned by banks - a "self regulating" private cartel by charter. Even congress can't "audit" the fed. The fed controls the government much more than vice versa.

Sure they will spin some line like 'profits' from the fed go to the government (profits above which are distributed to the private bank shareholders, of course!) but that's like saying I get reward points for every dollar I charge on a credit card. If you really think banks are "giving up" a lot of profits, you might want to check the total % of profits that go to the financial sector in the US economy. What are "profits" anyway when you can just print money - what is profit measured by?

Furthermore, even your 'small banks' that "loan" money under fractional reserve rules are, if you squint, awfully close to counterfeiting as that can raise the money supply 9 fold.

So I recommend you keep digging and follow the money.

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

#50

Post by gohrt »

salesforce_wha wrote: post #22
easytiger wrote: post #18

Earlier quoted context omitted.

> The libor scandal cost the U.S. at least $6 billion in interest charges (y) and another $4 billion just to unwind their positions. Got a reference for that? Not being a dick just interested to read more. For that amount of damage to have occured in Libor is an interesting and important concept. An open way to show its calculation should exist.

No problem, I got it from Wikipedia which in return cites a bloomberg article. http://en.wikipedia.org/wiki/Libor#Aftermath Finding actual damages proved really difficult on this subject.

Considering a theft of $5000 can land a person in jail, it shouldnt be a grave concern that we can't say exactly how many $billions were stolen by the LIBOR cospirators.
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