5 ms·

Just to clarify, They were sent to prison for "market manipulation and fraud" which are crimes in many places, not just Iceland. They weren't sent to prison f

Just to clarify, They were sent to prison for "market manipulation and fraud" which are crimes in many places, not just Iceland. They weren't sent to prison for being "bad bankers" which isn't a crime in Iceland or anywhere else.

bradleyjg 11y ago
Yes. Just look at all those bankers that went to prison for 30+ years of manipulating LIBOR. Well one banker anyway. And all those bankers that went to prison for reps and warranty fraud on synthetic CDOs. Well no bankers anyway. This is clearly a dog bites man story about something that happens all over.
- forgetsusername 11y ago
  >Well no bankers anyway. Please point to the convictions. We don't throw people in jail because we don't like their business practices. The idea that the government wasn't absolutely salivating at the opportunity to throw some bankers in jail is one of the funniest things I read on the internet. People don't seem to understand that the government and banking industry are often at odds on many things. Of course, often these are the same people who interpret things like TARP as a "gift" to the banks.
  - crdoconnor 11y ago
    >We don't throw people in jail because we don't like their business practices. We do when they're fraudulent* * Exceptions for too big to jail bankers. Jamie Dimon won't see a day in jail despite running a criminal enterprise. >The idea that the government wasn't absolutely salivating at the opportunity to throw some bankers in jail is one of the funniest things I read on the internet. People don't seem to understand that the government and banking industry are often at odds on many things. The banking industry has a meltdown when the government isn't treating them with utter admiration. If the DoJ were actually concerned about putting bankers behind bars they could easily use Sarbanes-Oxley to make a few bank CEOs do the perp walk in an orange jumpsuit. They're far too rich a source of campaign contributions, however (see Hillary's Goldman Sachs speaking fees for instance).
    - forgetsusername 11y ago
      >Jamie Dimon won't see a day in jail despite running a criminal enterprise. Funniest thing I might read today. This is just another near-daily HackerNews anti-bank circlejerk amongst people who spend way too much time watching conspiracy theories on YouTube.
  - jsprogrammer 11y ago
    OK, how was TARP not a gift?
    - nickles 11y ago
      TARP has yielded a $64.5B profit [0] for the government. It was a loan, not a gift. It should be noted that the financial bailout was profitable, while the auto bailout netted a $9.5B loss [1]. [0] https://projects.propublica.org/bailout/ https://projects.propublica.org/bailout/ [1] http://www.nytimes.com/2014/12/20/business/us-signals-end-of-bailouts-of-automakers-and-wall-street.html http://www.nytimes.com/2014/12/20/business/us-signals-end-of...
      - ktRolster 11y ago
        Of course, the way the banks paid back TARP is with money given to them through the quantitative easing programs......
      - jessaustin 11y ago
        As the auto bailout shows, bailouts are risky. There was no guarantee that the Treasury would "profit" on either bailout. Therefore, these public actions must be judged in terms of public priorities, not by the "returns". Really though, does this have to be spelled out? The government should represent citizens, not investors. All of the chronic systemic problems that led to the "crisis" conditions in 2008 have only gotten worse since the bailouts. By that measure, they were not the best public actions that could have been taken, for the public. For Hank Paulson and his cronies, they certainly were the best public actions that could have been taken.
      - gizmo 11y ago
        The return on TARP money was far below market rate. The difference is unquestionably a gift. In addition, had the TARP money not been sufficient to get the businesses back to profitability an additional bailout would have followed. It's heads-you-win tails double-or-nothing game. The recipients understood this was a gift, which is why wall street cheerfully awarded itself 18 billion in bonuses after receiving 125 billion in bailouts.
  - iheartmemcache 11y ago
    Let's be honest, for every overworked DA who is ambitious enough to attempt to prosecute a banker, you will immediately have ten 6th year associates out of their top 1/3rd from UChic, Yale and Stanford willing to put in 90 hours because junior partner at Cravath or Skadden is so close they can taste it. TARP was absolutely necessary (we absolutely would have had a complete and total systemic failure had relief not been provided), but the US government could have dictated far stricter terms at which the T-notes were issued which would have benefited the country in the long-term. Instead of a simple bond, they could have offered an alternative instrument that ensured less of a .. cavalier.. attitude towards trading. "These bonds are issued contingent upon .. {loans must be underwritten by X% in fungible assets, rather than ISDA 3rd-order derivatives (ugh bad pun); Y% of your profits for the next Z years must be invested in a FDIC-esque safety fund as insurance for the next crash; or hell, 'the US government will offer $foo MM in exchange for $bar equity, the profits of which will go towards this years deficit/national debt/...'. If you read first-party accounts at the time when Mae/Mac/Stearns and AIG when down, absolutely everyone was so panicked the board members/CEOs would have taken those terms.
    - forgetsusername 11y ago
      >Let's be honest Yes, convicting these people would have been difficult (which speaks to the alleged crimes, in my opinion). Yes, the bank bailouts weren't a paragon of good sense. Hopefully lessons will be learned for the next time. Perfectly valid arguments and far removed from "toss these chaps in prison". I don't want to live in that world.
whistlecrackers 11y ago
Yeah, but putting it that way it doesn't make Iceland seem like the Socialist utopia that it is. Evil bankers are the cause of all of the world's problems; they're why things aren't free and stuff. #FeelTheBern
- dang 11y ago
  Please stop posting unsubstantive comments to Hacker News.
emodendroket 11y ago
The difference is that in the US, while it would have been possible to prosecute bankers under existing law after the 2008 meltdown, we did not.
- ktRolster 11y ago
  I don't even care that we didn't prosecute them. I just wish they weren't bailed out by the government (aka my tax money) when they went under. It's a free market: you make mistakes, you lose.
  - mrweasel 11y ago
    >It's a free market: you make mistakes, you lose. Precisely, if you invest money, you should be prepared to lose that money. Now we're in a situation where if the amount you lose is large enough, no worries, the tax payers will refund your investment. It was a large amount you lost after all. Here, in Denmark, we now have "systemic banks" aka "to big to fail", just like in the US. Not once have I hear someone suggest that MAYBE just fucking maybe, the issue is that the banks are to large. But no no, we'll have non of that. In fact let's make it an issue that to many people pick smaller, less well consolidated banks. How can a government not recognize that it's a problem if a country will be thrown in to chaos (apparently) should this private company fail.
    - ktRolster 11y ago
      Not once have I hear someone suggest that MAYBE just fucking maybe, the issue is that the banks are to large. Smart people have said it. Here's Paul Volcker saying, "Any bank that is too big to fail is too big to exist." They should be broken up: http://www.wsj.com/articles/SB10001424052748704825504574586330960597134 http://www.wsj.com/articles/SB100014240527487048255045745863... Sheila Bair, the head of FDIC was also talking about breaking up banks that were too big. But you know, there were lobbyists, and also the regulators who want to regulate large things. Eventually it will happen, after the next crisis, or the one after that, because, as Volcker says, "it just makes sense."
  - 11y ago
JumpCrisscross 11y ago
To add to this, the fraud was pretty brazen. For example, these bankers [1] approved a loan to a shell company owned by the bank's insiders for the purpose of buying the banks shares. None of the large banks in the U.S. did anything like that. The closest we've had is the LIBOR scandal, where prosecution is certainly happening. [1] http://uk.reuters.com/article/uk-iceland-crisis-idUKBRE8BR0EW20121228 http://uk.reuters.com/article/uk-iceland-crisis-idUKBRE8BR0E...

bradleyjg 11y ago

Yes. Just look at all those bankers that went to prison for 30+ years of manipulating LIBOR. Well one banker anyway. And all those bankers that went to prison for reps and warranty fraud on synthetic CDOs. Well no bankers anyway. This is clearly a dog bites man story about something that happens all over.

forgetsusername 11y ago
>Well no bankers anyway. Please point to the convictions. We don't throw people in jail because we don't like their business practices. The idea that the government wasn't absolutely salivating at the opportunity to throw some bankers in jail is one of the funniest things I read on the internet. People don't seem to understand that the government and banking industry are often at odds on many things. Of course, often these are the same people who interpret things like TARP as a "gift" to the banks.
- crdoconnor 11y ago
  >We don't throw people in jail because we don't like their business practices. We do when they're fraudulent* * Exceptions for too big to jail bankers. Jamie Dimon won't see a day in jail despite running a criminal enterprise. >The idea that the government wasn't absolutely salivating at the opportunity to throw some bankers in jail is one of the funniest things I read on the internet. People don't seem to understand that the government and banking industry are often at odds on many things. The banking industry has a meltdown when the government isn't treating them with utter admiration. If the DoJ were actually concerned about putting bankers behind bars they could easily use Sarbanes-Oxley to make a few bank CEOs do the perp walk in an orange jumpsuit. They're far too rich a source of campaign contributions, however (see Hillary's Goldman Sachs speaking fees for instance).
  - forgetsusername 11y ago
    >Jamie Dimon won't see a day in jail despite running a criminal enterprise. Funniest thing I might read today. This is just another near-daily HackerNews anti-bank circlejerk amongst people who spend way too much time watching conspiracy theories on YouTube.
- jsprogrammer 11y ago
  OK, how was TARP not a gift?
  - nickles 11y ago
    TARP has yielded a $64.5B profit [0] for the government. It was a loan, not a gift. It should be noted that the financial bailout was profitable, while the auto bailout netted a $9.5B loss [1]. [0] https://projects.propublica.org/bailout/ https://projects.propublica.org/bailout/ [1] http://www.nytimes.com/2014/12/20/business/us-signals-end-of-bailouts-of-automakers-and-wall-street.html http://www.nytimes.com/2014/12/20/business/us-signals-end-of...
    - ktRolster 11y ago
      Of course, the way the banks paid back TARP is with money given to them through the quantitative easing programs......
    - jessaustin 11y ago
      As the auto bailout shows, bailouts are risky. There was no guarantee that the Treasury would "profit" on either bailout. Therefore, these public actions must be judged in terms of public priorities, not by the "returns". Really though, does this have to be spelled out? The government should represent citizens, not investors. All of the chronic systemic problems that led to the "crisis" conditions in 2008 have only gotten worse since the bailouts. By that measure, they were not the best public actions that could have been taken, for the public. For Hank Paulson and his cronies, they certainly were the best public actions that could have been taken.
    - gizmo 11y ago
      The return on TARP money was far below market rate. The difference is unquestionably a gift. In addition, had the TARP money not been sufficient to get the businesses back to profitability an additional bailout would have followed. It's heads-you-win tails double-or-nothing game. The recipients understood this was a gift, which is why wall street cheerfully awarded itself 18 billion in bonuses after receiving 125 billion in bailouts.
- iheartmemcache 11y ago
  Let's be honest, for every overworked DA who is ambitious enough to attempt to prosecute a banker, you will immediately have ten 6th year associates out of their top 1/3rd from UChic, Yale and Stanford willing to put in 90 hours because junior partner at Cravath or Skadden is so close they can taste it. TARP was absolutely necessary (we absolutely would have had a complete and total systemic failure had relief not been provided), but the US government could have dictated far stricter terms at which the T-notes were issued which would have benefited the country in the long-term. Instead of a simple bond, they could have offered an alternative instrument that ensured less of a .. cavalier.. attitude towards trading. "These bonds are issued contingent upon .. {loans must be underwritten by X% in fungible assets, rather than ISDA 3rd-order derivatives (ugh bad pun); Y% of your profits for the next Z years must be invested in a FDIC-esque safety fund as insurance for the next crash; or hell, 'the US government will offer $foo MM in exchange for $bar equity, the profits of which will go towards this years deficit/national debt/...'. If you read first-party accounts at the time when Mae/Mac/Stearns and AIG when down, absolutely everyone was so panicked the board members/CEOs would have taken those terms.
  - forgetsusername 11y ago
    >Let's be honest Yes, convicting these people would have been difficult (which speaks to the alleged crimes, in my opinion). Yes, the bank bailouts weren't a paragon of good sense. Hopefully lessons will be learned for the next time. Perfectly valid arguments and far removed from "toss these chaps in prison". I don't want to live in that world.

whistlecrackers 11y ago

Yeah, but putting it that way it doesn't make Iceland seem like the Socialist utopia that it is. Evil bankers are the cause of all of the world's problems; they're why things aren't free and stuff. #FeelTheBern

dang 11y ago
Please stop posting unsubstantive comments to Hacker News.

emodendroket 11y ago

The difference is that in the US, while it would have been possible to prosecute bankers under existing law after the 2008 meltdown, we did not.

ktRolster 11y ago
I don't even care that we didn't prosecute them. I just wish they weren't bailed out by the government (aka my tax money) when they went under. It's a free market: you make mistakes, you lose.
- mrweasel 11y ago
  >It's a free market: you make mistakes, you lose. Precisely, if you invest money, you should be prepared to lose that money. Now we're in a situation where if the amount you lose is large enough, no worries, the tax payers will refund your investment. It was a large amount you lost after all. Here, in Denmark, we now have "systemic banks" aka "to big to fail", just like in the US. Not once have I hear someone suggest that MAYBE just fucking maybe, the issue is that the banks are to large. But no no, we'll have non of that. In fact let's make it an issue that to many people pick smaller, less well consolidated banks. How can a government not recognize that it's a problem if a country will be thrown in to chaos (apparently) should this private company fail.
  - ktRolster 11y ago
    Not once have I hear someone suggest that MAYBE just fucking maybe, the issue is that the banks are to large. Smart people have said it. Here's Paul Volcker saying, "Any bank that is too big to fail is too big to exist." They should be broken up: http://www.wsj.com/articles/SB10001424052748704825504574586330960597134 http://www.wsj.com/articles/SB100014240527487048255045745863... Sheila Bair, the head of FDIC was also talking about breaking up banks that were too big. But you know, there were lobbyists, and also the regulators who want to regulate large things. Eventually it will happen, after the next crisis, or the one after that, because, as Volcker says, "it just makes sense."
- 11y ago

JumpCrisscross 11y ago

To add to this, the fraud was pretty brazen. For example, these bankers [1] approved a loan to a shell company owned by the bank's insiders for the purpose of buying the banks shares. None of the large banks in the U.S. did anything like that. The closest we've had is the LIBOR scandal, where prosecution is certainly happening. [1] http://uk.reuters.com/article/uk-iceland-crisis-idUKBRE8BR0EW20121228 http://uk.reuters.com/article/uk-iceland-crisis-idUKBRE8BR0E...