4 ms·

I hear you, in terms of punishing the wrongdoers, but how do you punish someone that is overseeing everyone else's money without having adverse effects on the b

I hear you, in terms of punishing the wrongdoers, but how do you punish someone that is overseeing everyone else's money without having adverse effects on the bank's unknowing customers. If WF goes under and takes their customers down as well, then we didn't really solve the problem. Put another way, you end up punishing the people who had nothing to do with the crimes rather than those that committed the crimes in the first place

pg314 10y ago
Putting WFC in bankruptcy like fludlight proposes does not necessarily make customers lose money. I do agree, though, that it doesn't solve the problem.
- forgetsusername 10y ago
  >Putting WFC in bankruptcy like fludlight proposes does not necessarily make customers lose money It should. Otherwise the rest of us are paying for it. "Customers" are either lending to or borrowing from the bank. If it's the former, it's usually safe...but not 100%. If the bank fails to pay you back, that's your problem, is it not?
  - pg314 10y ago
    > It should. Otherwise the rest of us are paying for it. No, WFC is solvent, so nobody has to pay for anything. In a bankruptcy, customers, the people depositing money in the bank, are first in line, then bondholders (first senior, then junior) and finally stockholders. Fludlight was proposing forcing WFC into bankruptcy as a punishment. Stockholders would lose all their money and bondholders lose part; customers would get their deposits back, I imagine. > If the bank fails to pay you back, that's your problem, is it not? In a free market, yes. But fractional reserve banks in a free market are vulnerable to bank runs because they engage in maturity transformation (borrow short, lend long). That is an unstable situation: an unsubstantiated rumor can start a bank run which would lead to a collapse of the bank. To remedy that, the government usually guarantees deposits up to a certain amount (in the US, FDIC guarantees up to $250,000).
    - forgetsusername 10y ago
      And when the government guarantees the deposits, who pays? Us.
yrro 10y ago
Are retail deposits not covered by some kind of government backed scheme? Are commercial deposits not insured as a matter of course?
BuuQu9hu 10y ago
Prison?
simonh 10y ago
Putting a murderer in prison doesn't un-murder their victims and it can leave their dependents without a means of support, but you still do it.

pg314 10y ago

Putting WFC in bankruptcy like fludlight proposes does not necessarily make customers lose money. I do agree, though, that it doesn't solve the problem.

forgetsusername 10y ago
>Putting WFC in bankruptcy like fludlight proposes does not necessarily make customers lose money It should. Otherwise the rest of us are paying for it. "Customers" are either lending to or borrowing from the bank. If it's the former, it's usually safe...but not 100%. If the bank fails to pay you back, that's your problem, is it not?
- pg314 10y ago
  > It should. Otherwise the rest of us are paying for it. No, WFC is solvent, so nobody has to pay for anything. In a bankruptcy, customers, the people depositing money in the bank, are first in line, then bondholders (first senior, then junior) and finally stockholders. Fludlight was proposing forcing WFC into bankruptcy as a punishment. Stockholders would lose all their money and bondholders lose part; customers would get their deposits back, I imagine. > If the bank fails to pay you back, that's your problem, is it not? In a free market, yes. But fractional reserve banks in a free market are vulnerable to bank runs because they engage in maturity transformation (borrow short, lend long). That is an unstable situation: an unsubstantiated rumor can start a bank run which would lead to a collapse of the bank. To remedy that, the government usually guarantees deposits up to a certain amount (in the US, FDIC guarantees up to $250,000).
  - forgetsusername 10y ago
    And when the government guarantees the deposits, who pays? Us.

yrro 10y ago

Are retail deposits not covered by some kind of government backed scheme? Are commercial deposits not insured as a matter of course?

BuuQu9hu 10y ago

Prison?

simonh 10y ago

Putting a murderer in prison doesn't un-murder their victims and it can leave their dependents without a means of support, but you still do it.