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Why the S.E.C. didn't hit Goldman Sachs harder
- chollida1 10y agoFor those of you who haven't spent the past 10 years of your lives following this and want a quick TL/RD, the below link has a good recap of what Abacus is. http://www.reuters.com/article/us-goldmansachs-abacus-factbox-idUSTRE63F5CZ20100416 http://www.reuters.com/article/us-goldmansachs-abacus-factbo...
- jbob2000 10y agoHere's the TL;DR: "In our conversations, Kidney reflected on why that might be. The oft-cited explanations—campaign contributions and the allure of private-sector jobs to low-paid government lawyers—have certainly played a role. But to Kidney, the driving force was something subtler. Over the course of three decades, the concept of the government as an active player had been tarnished in the minds of the public and the civil servants working inside the agency. In his view, regulatory capture is a psychological process in which officials become increasingly gun shy in the face of criticism from their bosses, Congress, and the industry the agency is supposed to oversee. Leads aren’t pursued. Cases are never opened. Wall Street executives are not forced to explain their actions." Basically, regulators don't have the balls to go after the big guys.
- maxxxxx 10y ago"regulators don't have the balls " That's a little harsh. Everybody loses their balls quickly if they aren't backed up by their bosses.
- bg4 10y agoNo balls all the way up the chain.
- bryondowd 10y agoSounds more like the people at the top of the chain having different incentives and thus neutering the people further down who actually wanted to get their job done.
- neffy 10y agoYup. The lunatics have taken over the asylum.
- forrestthewoods 10y agoDoesn't matter who cut who's balls off. No balls is no balls.
- jandrese 10y agoOr more to the point, if you are overseen by congress, which is in the pocket of these big banks, then regulatory action can be dangerous to your career. "Get big government out of my business!" "These regulations are killing my business!" "People are going to go overseas and do the same thing!" It's not just congressmen too. Even the public can be turned against the regulators with a steady drip of anti-regulation rhetoric from the newsmedia.
- ArkyBeagle 10y agoRegulation can't be shown to actually work in many cases. The way it is made is .. terrifying. This is a corollary of "it's twice as hard to debug something as it was to write in the first place."
- feverishaaron 10y agoExactly. If it affects my personal livelihood, it is not logical to pursue.
- yolesaber 10y agoExcept when you are a public official it is your duty to pursue these sorts of cases for the public good.
- harywilke 10y agoDamn your duty, I have bills to pay. Point is, why risk my job when my boss wont have my back?
- bcook 10y agoThis statement makes me sad... I mean, I adhere to it, but I am not exactly a person who should be emulated.
- feverishaaron 10y agoIt's their boss' (aka Congress) job to set a tone where it is not a livelihood risk to "do your duty". If you're a peon, "doing your duty" is a great way to put a target on your back.
- maxxxxx 10y ago100% right. Before people start looking at those guys they should look at themselves. A lot of people in corporations do things they don't agree with or find ethically questionable but since the boss says so they will do it. "The fish stinks from the head". This is not isolated to government.
- wldcordeiro 10y agoIt's the same story everywhere. As long as there is hierarchy (which we do need in some form in most organizations) then there will be incentive for people to do things they personally disagree with due to the conflict of interest that arises. It seems like one of the hardest problems to solve in our society because it seems to be so tied to our nature. I can recall doing things in grade school I knew was wrong but felt obligated to do because my peers and those I looked up to do too. While that isn't the same exact situation, the dynamics at play are the same. What can be done to combat this innate in-group/out-group behavior more effectively in our organizations and society?
- bpchaps 10y agoTss. After seeing how weakly regulators push exchanges like CME to prevent legitimate and proven spoofing, it's pretty clear that "backed up by their bosses" goes all the way up the chain. Side comment: The GS head of technology recently left there to go to an at-best-mediocre options brokerage recently, which I recently left. Not gonna lie, that makes my suspicio-meter go off after seeing the shenanigans they did there. Side note again: Another thing that pushes my supsicio-meter pretty far is seeing secret service, Harry Reid and a very well known name in HFT walk into an office and talk to each other for an hour. I don't want to come to any direct conclusions, but "People are shitty" comes close.
- ArkyBeagle 10y agoPeople will inevitably identify with an adversary if the relationship lasts long enough.
- deleted 10y ago[deleted]
- wnevets 10y agobeing the fun police is hard.
- _delirium 10y agoSounds a bit like a variety of legal realism, roughly the idea that the law is not what's formally written down, but the collection of practices that can be inferred from what people (judges, prosecutors, police, etc.) actually do. If Wall Street practices have become culturally normalized, especially among elites, then they simply get thought of as "legal", regardless of whether they follow the letter of the law, and it appears radical to argue that they should be prosecuted for doing things that are just normal practice and therefore presumptively legal. It looks to many people like you're trying to change the law in that case (the government intervening to overturn normal business practices) even if formally you're just enforcing the law as actually written. Many people in a position to initiate prosecutions shy away from that unless they have strong political backing (e.g. from a popular politician willing to make trust-busting or taking on Wall Street their signature issue).
- jbob2000 10y agoCan I use that argument to get out of speeding tickets? It's culturally normalized to go 10-20kph over the limit, and people actually get pissed if you do the limit on the highway.
- _delirium 10y agoWhere I live (Texas) the de facto norm really does appear to be that you're entitled to add 10 mph (~15 kph) to the posted speed limit, and that's roughly what the police enforce. People get really angry and start writing their politicians if police start frequently writing tickets for less than that, so they usually don't. Some police out in West Texas used to be notorious for setting up speed traps on the highways and enforcing the speed limit strictly (as a source of revenue), so the state legislature actually cracked down on them because people were so angry.
- notahacker 10y agoThe UK has strict guidelines about where fixed speed cameras may be located and how they should be signposted for similar reasons.
- shostack 10y agoI totally get that piece, but I feel like in some ways it is meant as an attempt to deflect conversation away from what is stated to be a factor: "The oft-cited explanations—campaign contributions and the allure of private-sector jobs to low-paid government lawyers—have certainly played a role." Emphasis on "have certainly played a role." The moment I hear that, I ask why the hell we aren't focusing the conversation there and keeping it there. Guarantee a lot of the "lack of balls" has to do with worrying about future security in the form of campaign contributions and private-sector jobs. How about we solve for that problem first and see if they still lack balls when they are no longer worried about their financial future being directly tied to those they are supposed to police.
- deleted 10y ago[deleted]
- rayiner 10y agoWho at SEC is elected? How does the prospect of going into a private sector job (usually at a law firm which makes money from banks getting in trouble), dissuade anyone from taking down a big Wall Street player?
- chishaku 10y agoFederal agencies are ultimately responsible to Congress and the President. The recent (last 20 years) trend towards deregulation and lax enforcement (IMO) starts at the top but most visibly manifests in the actions or inaction of regulators like the SEC.
- Uhhrrr 10y ago* Regulators might be unofficially blackballed from companies in return for doing their jobs too well. * If regulators hurt the industry they're regulating, it means fewer jobs will be available for them when they switch to the private sector.
- rayiner 10y agoHolding bankers accountable would not "hurt the industry." The health of the industry is driven by non-government market factors. Indeed, aggressive enforcement means more private sector job opportunities for regulators. SEC lawyers generally don't go to banks--they go into private practice law firms. Those firms make money when banks get in trouble. The recent financial collapse was actually good for financial litigation departments. Looking at it another way: the amount of demand in antitrust litigation is much lower these days than it was 30 years ago when the DOJ was much more aggressive about antitrust enforcement. I just don't think the narrative about regulators going easy because they're hoping for a sweet gig at Goldman is consistent with what happens or even a theoretical analysis of peoples' incentives. Ultimately, it's politics. Bill Clinton implemented massive deregulation in the financial industry. Regulation is seen as an illegitimate intrusion into the market's operation. So long as that is the case, regulators will avoid being aggressive for fear of provoking a political backlash.
- fcp 10y agoSounds very similar to this story[0][1]. If i recall correctly: Ambitious NY Fed employee claims she was fired because she wouldn't soften language in a report; secretly records meetings that show extreme deference to banks. The This American Life version is really great. [0]https://www.propublica.org/article/carmen-segarras-secret-recordings-from-inside-new-york-fed https://www.propublica.org/article/carmen-segarras-secret-re... [1]http://www.thisamericanlife.org/radio-archives/episode/536/the-secret-recordings-of-carmen-segarra http://www.thisamericanlife.org/radio-archives/episode/536/t...
- kelseydh 10y agoVery interesting stuff. Some of the better direct evidence for regulatory capture I have read.
- ikeboy 10y agoInteresting; Matt Levine claims the opposite is true, that a revolving door makes regulation harsher. http://www.bloombergview.com/articles/2014-06-26/strict-regulation-makes-the-revolving-door-spin-faster http://www.bloombergview.com/articles/2014-06-26/strict-regu... http://www.bloombergview.com/articles/2016-04-12/mortgage-deals-and-revolving-doors http://www.bloombergview.com/articles/2016-04-12/mortgage-de... http://www.bloombergview.com/articles/2016-04-14/argentine-bonds-and-executive-pay http://www.bloombergview.com/articles/2016-04-14/argentine-b...
- jimmytidey 10y agoMatt Levine's theories nearly all suggest we should end the 'revolving door' because it leads to conflicts of interests - either by making regulation harsher or less harsh, rather than impartial. If regulators really are harsh so banks hire them "to get them of their backs", presumably banks have an expectation that this works, causing in the long run, softer regulation. The alternative theory that regulators are incentivised to be diligent and fair so banks will hire them on that basis is... not compatible with most people's understanding of the financial sector's culture.
- rayiner 10y agoThen you end up with career bureaucrats who have no idea what is going on regulating banks. Similar think led to crushing regulation in many areas of American life in the 1960's and 1970's. Deregulation of those industries led to innovations like UPS and FedEx that weren't legal before.
- devy 10y ago> Basically, regulators don't have the balls to go after the big guys. Bernie would change that if given the opportunity.
- krapp 10y agoWhat presidential candidates promise and what presidents deliver are often very different.
- ScottBurson 10y agoStill, if Bernie did manage to get elected, that would be a clear message to the SEC that the public supports a more vigorous enforcement policy. Even if all he does is make Hillary very nervous before losing the primary to her, I would hope that would still get the SEC's attention as well as hers.
- ArkyBeagle 10y agoSo what if that knocks, say 2% off GDP growth?
- rurban 10y agoWe thought the same about Obama and then he turned 180 on us. Bernie has a history favoring weapon makers from his own state as well as going after people using his logo, so we can be pretty sure that given the opportunity it will not all be as wonderful as he promises. And who knows what they have collected about him in the meantime. There must have been a reason why Obama turned 180 so suddenly, as soon as he was in office.
- spinlock 10y agoI read it differently. My take away was that the SEC didn't have the _evidence_ to go after anyone but Fabricci. However, I really don't understand how Goldman would have profited from aiding Paulson & co. Goldman set up a security that let people bet for or against the housing market. It's similar to Vegas letting people bet on a sports match. Why would Vegas fix the game that other people were betting on? It's not like Goldman made more money because Abacus paid out to Paulson vs. the Germans.
- chishaku 10y ago> My take away was that the SEC didn't have the _evidence_ to go after anyone but Fabricci. "Nor had they questioned top bankers in Goldman’s mortgage businesses or any of the bank’s senior executives. Even more surprising to Kidney, the agency had not taken testimony from John Paulson, the key figure at his eponymous hedge fund." An investigator that doesn't ask questions will have a hard time finding evidence.
- mathattack 10y agoThey get very large fees for "securitizing the deal", or being the ones who turns a bunch of loans into something that can be traded. In the case of very complicated deals, it can be several percent for a transaction that is low-risk for the bank since they've already identified both sides of the trade.
- spinlock 10y agoThere weren't any loans being bundled in this deal. It was a synthetic. My point is tjs Goldman is the house and made money from the deal not the outcome.
- cowardlydragon 10y agoYes, the CIA, FBI, NSA, and all the lot have the entirety of our financial and communications records stored away. But there's no evidence anywhere. Sorry. Right.
- dguaraglia 10y agoThis explanation is just an attempt at hiding the actual problem: the revolving door between the public and the private sector, specially in the banking industry. Of course you don't want to be the one sending Lloyd Blankfein to prison. No way you are going to get a lofty job at a bank after that. This is the one case where regulators would have massive popular support, specially in an election year when two very popular candidates (well, three if you believe Hillary's latest statements) are calling for stronger measures against the people responsible for the "Great Recession".
- mruniverse 10y agoWould it work if we made the revolving door less attractive? For instance, could we pay the regulators enough for it to become attractive? Over time, maybe being a regulator will become the end goal of new grads.
- wldcordeiro 10y agoCombining higher pay with putting various legal limitations on people who move between the two sides to combat the conflict of interest would certainly help.
- hugh4 10y agoJudges typically get paid less than many of the lawyers who argue in front of them, but there's still plenty of lawyers who want to take a paycut to be judges, and not much action in the other direction. Why? Because judges have really high status.
- mruniverse 10y agoI was thinking that if the regulators are paid more, get a little more power (not sure if they already have enough power) and start to bust some bankers, get some publicity, then that might eventually lead to more status.
- ArkyBeagle 10y agoExcellent idea, but you run into the "ticket scalping is Bad" mentality.
- julian_1 10y ago> Basically, regulators don't have the balls to go after the big guys. The other component to this, is that regulatory compliance becomes a significant barrier to entry for new firms. Incumbents end up gaining even more organizational power as market power increases, and competition on price and service quality decreases.
- marcoperaza 10y agoGoldman Sachs has even mentioned this as an advantage on earnings calls. The regulatory burden on the financial industry is insurmountable for a new entrant.
- wldcordeiro 10y agoThe movie "The Big Short" has a brief scene with reference to this that you reminded me of and I highly recommend the movie. In the scene one of the main characters is discussing with his brother's ex who is an SEC regulator and she says something to the affect of "the regulators are a revolving door of industry insiders and you aren't going to get looked at when applying for the cushy bank job if you're known as the stickler regulator."
- MichaelGG 10y agoIn Canada, there's a "saying" with the big Yelcos like BRM or Rogers: if they need a law passed, one of their VPs resigns and joins the CRCT (FCC equivalent). That'd explain how they pass laws like the one that mandated that competing DSL providers couldn't price services lower than Bell or offer uncapped data.
- wldcordeiro 10y agoThe same is said here but our current FCC chairman actually has some balls and was actively involved the past few years helping fight for net neutrality (though sadly at first being on the side of the ISPs)[0] which was kind of mind blowing. [0] https://en.wikipedia.org/wiki/Tom_Wheeler#Net_neutrality https://en.wikipedia.org/wiki/Tom_Wheeler#Net_neutrality
- cjarrett 10y agowheeler is awesome.
- cowardlydragon 10y agoThat was 100% unexpected by me when I heard about his nomination.
- r00fus 10y agoSadly, he's the general exception. Extraction industry is pretty horrible in terms of regulatory capture.
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- samstave 10y agoI found this to be an interesting theory: Panama papers is not a "leak" it was a hack by the NSA and only released a bunch of info on Panama based shell companies that are largely BRIC nations, none the US - and that it is a PSYOP to get a bit of anger against specifically others to protect US financial hegemony... The only country to prosecute bankers/Wall Street - the PM resigned after he got caught doing the same thing. It's revenge and a pre-emotive attack - but one that kind of lost control. Watch the Panama papers doc to see how In The 2013 doc PBS' "the warning" the DOJ literally stonewalls against all questions regarding going after Wall Street. The whole system is absolutely a corrupt greed ponzu scheme. What happened those three vids, please, and give me your opinion.
- kqr2 10y agoMatt Taibbi wrote about this in his book The Divide: American Injustice in the Age of the Wealth Gap [1]. Enron was probably the last big corporate take-down by the government. From an interview http://www.democracynow.org/2014/4/15/who_goes_to_jail_matt_taibbi http://www.democracynow.org/2014/4/15/who_goes_to_jail_matt_... But at the bottom of it, there was this thing that he [Eric Holder] laid out called the "collateral consequences doctrine." And what "collateral consequences" meant was that if you’re a prosecutor and you’re targeting one of these big corporate offenders and you’re worried that you may affect innocent victims, that shareholders or innocent executives may lose their jobs, you may consider other alternatives, other remedies besides criminal prosecutions—in other words, fines, nonprosecution agreements, deferred prosecution agreements. And again, at the time, it was a completely sensible thing to lay out. Of course it makes sense to not always destroy a company if you can avoid it. But what they’ve done is they’ve conflated that sometimes-sensible policy with a policy of not going after any individuals for any crimes. And that’s just totally unacceptable. 1. http://smile.amazon.com/Divide-American-Injustice-Age-Wealth/dp/0812983637 http://smile.amazon.com/Divide-American-Injustice-Age-Wealth...
- josho 10y agoOr concisely: Too big to fail; too big to jail
- maxerickson 10y agoShareholders don't deserve protection like that. I understand that giant corporations are not particularly run by shareholders, but if someone dumps their money into something and doesn't pay attention to it, it's fine to make them feel the consequences of not paying attention.
- arcticfox 10y agoI'm confused by this. Shareholders are some of the primary victims being defrauded in these cases. Enron's accounting gymnastics were precisely to defraud their shareholders. How is that negligence on the part of the shareholder? It's not - it's criminal on the part of the executives.
- blazespin 10y agoYeah, but why is congress criticizing the regulators?
- _yosefk 10y agoWhat if it's simply bribes and he won't say it because they will eat him alive? "Tarnished concept of government blah blah" sounds great to those who love the concept while not exposing this guy to libel lawsuits from the people put by this concept into positions to take the bribes.
- lifeisstillgood 10y agoThey don't have the upside. They already have the power to do almost anything to a bank. The top ranks of most big banks already spend most of their time worrying about the next inspection. As far as regulators go, there is not much more fear and respect and obedience they can get. So why make an example of anyone when day-to-day regulators are the big I ams A sort of reverse Regulatory capture has been achieved. The regulators are calling the shots, but don't see the need to dig deeper. The best analogy I can give is if Lord Ventinari from disc world were running 30's Chicago - Al Capone has been tamed, does not rock the boat and only kills his "own kind". Why should cleaning up the city and arresting Capone be a priority - he is under control. I like discworld novels but I am not sure I want to live innsuchba compromised society
- carsongross 10y agoThere isn't any great mystery here: it's regulatory capture. It's a well understood public choice problem: https://en.wikipedia.org/wiki/Regulatory_capture https://en.wikipedia.org/wiki/Regulatory_capture https://en.wikipedia.org/wiki/Public_choice https://en.wikipedia.org/wiki/Public_choice What's interesting to me is that quite smart people would expect the SEC to act otherwise.
- ArkyBeagle 10y agoBeats me why anybody would think that. Did we learn nothing from "Point Break?" :)
- vasilipupkin 10y agoOr, alternatively, in this case there was no good case as some SEC lawyers suggested. It seems strange to me to suggest that assembling a security of mortgage bonds so that one party could short it while another could go long it is a crime. That is what Goldman is supposed to do !
- wwwdonohue 10y agoThere was no good case because, as the article explains in quite a lot of detail, the team was instructed not to interview anyone in any position of responsibility at Goldman/Paulson. It also explains, in quite a lot of detail again, how Goldman was not simply "assembling a security of mortgage bonds." There was quite likely intentional fraud involved.
- joe_the_user 10y agoThe oft-cited explanations—campaign contributions and the allure of private-sector jobs to low-paid government lawyers—have certainly played a role. But to Kidney, the driving force was something subtler. The only "subtler" thing is that corrupt actors of this sort need to manufacture vague and appealing alternatives to plain-old-corruption in order to look themselves in the mirror.
- CPAhem 10y agoGood summary. Those who pay the piper call the tune, and have made themselves above the law.
- daodedickinson 10y agoIt's a political process in which officials are intimidated by their bosses from pursuing justice. Regulators don't have guns big enough for the big guys; they can't play the game of thrones.
- atmosx 10y ago> Basically, regulators don't have the balls to go after the big guys. Wouldn't you? The regulators receive direct or indirect instructions. They can see what happens when they choose not to listen. So why bother playing hero? Real life is not hollywood. You can always make the opposite argument no matter how flawed might be e.g. "hey! this guy is killing corporate America whilst the entire world is the midst of a crisis! It's crazy right?", you know how many bellow 50k/year households will buy that argument? It's crazy ;-) This is a government policy, whether is good or bad depends on which side of the fence you stand. It's bad for the majority and for the rule of law, but who cares.
- ArkyBeagle 10y agoAdversarial relationships in governance don't work.
- deleted 10y ago[deleted]
- ErikAugust 10y agoThe lyrics of this song contain the answer: https://www.youtube.com/watch?v=s2VG53RIJ50 https://www.youtube.com/watch?v=s2VG53RIJ50
- josho 10y agoThanks for baiting me into listening to 30 seconds of crappy music to merely here "It's the money".
- nickpsecurity 10y agoIt's pretty simple: the Treasury head and many others in regulators are ex-Goldman. The word is subversion. The biggest violators have people embedded into the regulators to make sure they're not a problem.
- maxerickson 10y agoJack Lew did a brief stint at Citigroup but is reasonably described as having a career in public service: https://en.wikipedia.org/wiki/Jack_Lew https://en.wikipedia.org/wiki/Jack_Lew Tim Geithner is also reasonably described as having a career in public service: https://en.wikipedia.org/wiki/Timothy_Geithner https://en.wikipedia.org/wiki/Timothy_Geithner Don't despair! He has shadowy connections to the Kissinger Group (a brief stint early in his career). Henry Paulson did in fact lead Goldman Sachs: https://en.wikipedia.org/wiki/Henry_Paulson https://en.wikipedia.org/wiki/Henry_Paulson John Snow was a railroad tycoon: https://en.wikipedia.org/wiki/John_W._Snow https://en.wikipedia.org/wiki/John_W._Snow Paul O'Neill was an industrial magnate that did a stint leading the mysterious RAND Corporation: https://en.wikipedia.org/wiki/Paul_H._O'Neill https://en.wikipedia.org/wiki/Paul_H._O'Neill
- nickpsecurity 10y agoThe majority of that list fits my pattern with two claimed to be public service. Lew was COO for one of the guilty parties as the stuff happens. Geithner came in after the bailouts started. Paulson is the main guilty party there. Lew and Geithner, whatever their beliefs, haven't tried to make a prosecution happen or significantly countered the funding. The crooks are doing A OK with some of their gains paid back in fines. Cost of doing business. List isn't looking good. That's without considering Kissinger or RAND connections. No speculation needed with results like this. ;)
- carsongross 10y agoThe formal concept is regulatory capture: https://en.wikipedia.org/wiki/Regulatory_capture https://en.wikipedia.org/wiki/Regulatory_capture Which is a result found in Public Choice analysis: https://en.wikipedia.org/wiki/Public_choice https://en.wikipedia.org/wiki/Public_choice The SEC is specifically mentioned in the first article. As I said elsewhere, what is surprising here is not that Goldman got a wrist slap, but that intelligent people expect some other result.
- Synaesthesia 10y agoGoldman Sachs has many well-documented connections to the US government & White house. https://prof77.wordpress.com/politics/an-updated-list-of-goldman-sachs-ties-to-the-obama-government-including-elena-kagan/ https://prof77.wordpress.com/politics/an-updated-list-of-gol... http://www.whiteoutpress.com/articles/q42012/list-of-goldman-sachs-employees-in-the-white-house/ http://www.whiteoutpress.com/articles/q42012/list-of-goldman...
- alanwatts 10y agoGoldman was Obama's 2nd biggest campaign contributor in 2008
- rayiner 10y agoGoldman, the company, is not allowed to contribute to candidates. What OpenSecrets means when it says that is Goldman employees contributed. Which is unsurprising. Goldman has tens of thousands of well-payed employees in a heavily Democratic state. Who would they contribute to?
- jchendy 10y agoThanks for saying this. I really wish the media would stop talking about candidates receiving donations from companies, which, as you point out is not possible.
- patrickk 10y agoYou could look at the Clinton speaking fees, and contributions to the Clinton foundation as buying access and favour from large companies. Also, corporations can contribute unlimited funds to a candidates SuperPac (which we swear doesn't coordinate directly with the campaign! Wink, wink!)
- astazangasta 10y agoThe Clintons made hundreds of millions off speaking fees and donations to their foundation, Presidential library, etc. We've perfected many avenues for graft here in the US.
- cloudjacker 10y agoSometimes I like to imagine that there are esoteric business relations like this in places like Palestine with an Israeli regulator. But I can never get a discussion deep enough going on about how the rule of law is implemented there.
- arca_vorago 10y agoI boil this down to a few categories of people in positions of government. There is a certain word, don't say it too loud or they might run or grab pitchforks, but the word is... cough... accountability. Looks around carefully. I spent some time contracting in DC, and the conclusion I came to is that there are three main types of people around the government and financial centers of power. 1) Those who are aware of the coming shitstorm and the complete corruption and subversion, and are just trying to "get theirs". This usually ends up in a "I got mine, fuck you" attitude. They don't push back because they know they would get punished for it, so they instead use their knowledge to further their career at the expense of their duty, and principles. They know, but don't care (enough to risk anything) about the status quo. 2) Those who know about the situation, and agree with it. These are usually indoctrinated extremists on either side of the spectrum, neocon, ultra-lib, the kind of people who now think capatalism in it's current form is the best gift from god and they speak of peace while selling massive amounts of weapons to dictators they setup all around the world. They know, and they care (for the wrong things), and actually perpetrate many of the abuses of the system. 3) Those who are too ignorant or stupid to know, or the slightly modified, those who have an idea about how bad it is but would rather stick their head in the sand and pretend reality doesn't exist. They don't know and don't care. Don't tell me where all the true patriots went. I have told my friends, that "I know not one brave soul, not one." (keep in mind I'm not talking about media figures, like Snowden, Manning, Drake, Binney, Tice, Edmonds, all of whom I do consider brave souls) To me, that is the real problem I faced when I had my Descartes reset, in that I started to realize that while I still believe in the power of an oath, and the duties that come with them, the majority of the people around me and in positions of real power pay tons of lip service to principles, but never actually do them. Personally, I think this is causing a kind of mass cognitive dissonance and compartmentalization that we have yet to realize the full impact of. When I think about the leadership traits I learned in the Corps, and how little of them I see in our leaders, I fear for the future of my country. (in case anyone is wondering, they are: Justice, Judgement, Dependability, Initiative, Decisiveness, Tact, Integrity, Enthusiasm, Bearing, Unselfishness, Courage, Knowledge, Loyalty, and Endurance.)
- alanwatts 10y ago>"I know not one brave soul, not one" Just because you don't recognize them doesn't mean they're not there. Sometimes when you're "behind enemy lines" or consciously trapped in extreme group think, being tactful means being subtle, delicate, or unnoticeable.
- whatok 10y agoFor people complaining about revolving doors, how do you get regulators with current industry expertise without.... industry experts?
- bduerst 10y agoYou don't really. The question that the revolving door complaint raises is whether these people can competently perform in these regulatory positions without bias. The solution isn't picking different people, it's transparency and enforcing the checks and balances. Articles like this are important, because the SEC is notoriously bad at being transparent (getting a D- on FOIA) and it exists as an independent agency in the executive branch.
- wldcordeiro 10y agoI dig your solution as well as some kind of limitations on "crossing the aisle" once you've gone over. Like former regulators have to have n years out of the job before being legally allowed to work for financial institutions or other ways to add distance and disincentive lenient regulation.
- whatok 10y agoI have issues with employment restrictions, more on the public to private transition. A public sector job in almost any fashion is not going to pay as much as a private sector finance job. n years is overly punitive for someone who is likely not paid very well to begin with. Let's say you reduce it down to jobs only above a certain level. You will absolutely see a shift in how people pursue promotions and probably introduce a disincentive to even enter the field at a senior level.
- alanwatts 10y agoProgram/code the regulations into the financial systems instead of relying on the thumbs up from an easily corruptible human being. Edit: immediately after posting this it occurred to me how terrible if not impossible this would be with the spaghetti code that is the tax and compliance legal code. So that would ideally have to be reformed, or rewritten and consolidated which is quite a big proposition
- jheriko 10y agoTL;DR; they are inept and impotent.
- qaq 10y agoMainstream Banks laundered close to 400 billions in drug money and got slapped with fines in 10 mil. range. Everyone is up in arms about GS. GS counterparties are supposed to be sophisticated Fund managers they are payed millions in fees for managing money. It's their job to do due diligence on the deals they do with GS or otherwise.
- Annatar 10y agoWhen I was growing up, my father used to tell me "bankers cause wars; they are the biggest criminals in the history of mankind." The article, and my own personal experience, which I'd rather not divulge in public, illustrate this perfectly. I know all the managers knew about the scam; they perpetrated it; and yet, they walk free and flush with cash from such deals, while ordinary people lost their homes and jobs. The S.E.C. is in cahoots with them. Essentially, the managers and lawyers inside of the S.E.C. and the banks found a way to commit criminal acts without going to prison. "Liberty and justice for all."
- inthewoods 10y agoAbacus is a more complicated case. The more shocking one to me is why Dick Flud isn't in jail. His use of the Repo 105 to move assets off the books to make Lehman look less leveraged and in better condition is a clearer case of fraud. He essentially did the same thing that Enron did - and Sarbanes Oxley requires that CEO sign off on the truthfulness of financial statements. Here's a guy that seems to have deliberately misled in those financial statements, yet he walks free. To me, that case is a more clear case of how the SEC is a toothless agency.
- retube 10y agoIs it fraud though? Repo 105 (and 108) were perfectly legitimate financing transactions and their reporting adhered to the relevant accounting standards. Yes they were done to lower the firm's reported leverage, but again this computation conformed to regulator standards. So not so clear cut it's "fraud" as nothing was mis-reported. Edit: incidently this is nothing like what Enron did, which was to move assets off balance sheet by moving them to SPVs and swapping the risk back (incidently also completely legal and fairly common in structured finance). These were simple repo transactions.
- inthewoods 10y agoThis is very similar to what Enron did, although the vehicle was different - they moved liabilities off the books to make themselves look less leveraged. Enron did this through shell companies owned by Fastow - Fuld/Lehman did this through abusing a standard rule and then getting E&Y to hold their nose and say that these transactions were not material and did not involve reporting the information to shareholders. To me, that's fraud. I'm not alone in this analysis: "The segment, which marks the first time Vakulas has been interviewed since filing his nine-volume, 2,200-page report two years ago, claims there is sufficient evidence to prosecute officials at Lehman. According to Vakulas, Lehman Brothers was intentionally misrepresenting their financial health." http://www.huffingtonpost.com/2012/04/23/lehman-brothers-investigator-60-minutes-fudged-numbers_n_1445421.html http://www.huffingtonpost.com/2012/04/23/lehman-brothers-inv... The key question, to me, is whether they knowingly misrepresented the health of the company in reporting to shareholders. If it ever went to trial I think the answer would be "yes" - but of course we'll never know because no one in the US government wants to go after them. At least the NY Attorney General went after E&Y and extracted a minor settlement (albeit one with no admission of wrongdoing): http://www.nytimes.com/2015/04/16/business/dealbook/ernst-young-in-settlement-over-lehman-brothers.html?_r=0 http://www.nytimes.com/2015/04/16/business/dealbook/ernst-yo...
- known 10y agoIt's due to https://en.wikipedia.org/wiki/Stockholm_syndrome https://en.wikipedia.org/wiki/Stockholm_syndrome
- Von_Jones 10y agoI am not an American and I wonder why the most likely presidential candidate is the one taking somewhat opaque "speaker's fees" from an organisation that a lot of Americans realise operates in ways akin to a mafia. From the outside it like turkeys voting for Xmas.
- paulddraper 10y agoBetter that than Thanksgiving.
- elangoc 10y agoIf the parent is Canadian, then you're talking about the same thing, effectively.