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On one hand there's some intuitive sense to that; by nature of being combined entities with a less risky business class you have less exposure to the fallout.

On one hand there's some intuitive sense to that; by nature of being combined entities with a less risky business class you have less exposure to the fallout. On the other hand, when you say "fared pretty well" do you mean insofar as "they didn't totally implode"? because at a glance every "bog standard bank" I'm pulling up #'s for over 06-08 did pretty terribly. That all being said, I'll echo, I agree that glass-Steagall wouldn't have prevented the financial crisis; and potentially had minimal mitigating effect, but stand by my core thrust that it's a datapoint of consumer-serving regulation being overturned by the interested parties to leave us in a situation where instituting even stronger regulation that might impose criminal consequences is politically infeasible.

rayiner 9y ago
You’re talking about two different kinds of things. Regulations exist to address conduct that isn’t inherently wrongful, but may be undesirable. Criminal laws exist to address conduct that is inherently malicious. They’re not on a spectrum, they’re two different things. We repealed Glass-Steagall for the same reason we deregulated airline fares. It was part of a larger, mostly positive trend of deregulating major sectors of the economy. That really has nothing to do with whether there are criminal laws we could’ve instituted. Were we going to put people in jail for trying to combine a commercial bank with an investment bank? Were we going to put people in jail for shoddy underwriting of mortgages? The fact that people always call for bankers to be jailed, but never specific bankers for specific conduct, is telling. When you’re talking about an anonymous our composite of an entire industry of people, it’s easy to project all the bad intent we consider necessary to prosecuting someone for a crime. It’s much harder when you’re talking about a specific person and his or her specific conduct. “We should send someone to jail because 35% of mortgages in this portfolio should’ve been valued this way if you used these different underwriting standards. No, he didn’t do the underwriting or tell anyone which standards to use. But he was higher on the org chart than the people who did!”
- existencebox 9y ago
  You seem to be selectively ignoring my core point. You're touting a narrative that distracts from the actual failure mode of these systems, repeatedly asking for the singular responsibility or legal culpability for the crisis, when that's not what I'm addressing. My focus is instead on the systemic patterns that allow for these decisions to be made _without liability_. Of course no one person decided, "let's go out and screw over mortgage holders," there was simply no natural incentive to look too hard at if that was happening; and in a political situation wherein even basic protections can't be maintained, _of course_ there wouldn't be laws to assign personal liability. It's funny that you bring up airline deregulation, as I consider that a wonderful example of exactly the pattern I'm citing. Although costs dropped, service quality followed alongside massive consolidation, soon accompanied by drops in employee pay and benefits, to the point that airlines now regularly file for bankruptcy and use that opportunity to further divest themselves of employee commitments while still giving massive bonuses to executives. (and similarly to the banks, in most of these cases _no one did anything illegal_) Yet; there is still no hope of even re-instituting regulatory regimes, let alone punitive regimes. (look at recent airline behaviors in the news re: bumping and consumer abuses, and the extremely muted responses for examples of this. While that might not directly result from deregulation, it speaks towards an extremely un-empowered consumer base) I would cap this rebuttal with a quote to directly shut down your assertion that deregulation has been "mostly positive", especially in light of your airline context, from the former CEO of American Airlines: "The consequences of deregulation have been very adverse. Our airlines, once world leaders, are now laggards in every category, including fleet age, service quality and international reputation. Fewer and fewer flights are on time. Airport congestion has become a staple of late-night comedy shows. An even higher percentage of bags are lost or misplaced. Last-minute seats are harder and harder to find. Passenger complaints have skyrocketed. Airline service, by any standard, has become unacceptable." To bring this ramble back to the point, I believe it's the wrong question to ask "what specific law did they break" when we've had a combination of conscious choice to trade worker and consumer protections for lower costs, and incentives aligned behind the powers that be to encourage that, such that even the most basic protections are non-existent, let alone a specific system of accountability.
  - harryh 9y ago
- vkou 9y ago
  > The fact that people always call for bankers to be jailed, but never specific bankers for specific conduct, is telling. The only telling thing about is that the system is so incredibly opaque, and responsibility for harm is so diffused in it, that it's a criminal's dream. What sort of redress should we seek for their reckless behaviour? Criminal convictions, debt forgiveness, nationalization. Not a single one of them took place. Just because the public was not directly being defrauded (even though plenty of actual fraud did take place), doesn't mean that we were not impacted by the fraud that was taking place. Who was responsible for the Iraq war? Everyone was involved in the lies that lead up to it, but nobody - nobody has been held accountable. Does that mean that there wasn't a thing wrong with how the GOP dragged two countries into it? It's just an unfortunate accident that bad behaviour in bad faith brought about bad results, and we should throw our hands in the air and say: "Well, shucks! What an unfortunate accident! It would be terrible if we sought redress for it... Or changed the rules so that it wouldn't happen again."

rayiner 9y ago

You’re talking about two different kinds of things. Regulations exist to address conduct that isn’t inherently wrongful, but may be undesirable. Criminal laws exist to address conduct that is inherently malicious. They’re not on a spectrum, they’re two different things. We repealed Glass-Steagall for the same reason we deregulated airline fares. It was part of a larger, mostly positive trend of deregulating major sectors of the economy. That really has nothing to do with whether there are criminal laws we could’ve instituted. Were we going to put people in jail for trying to combine a commercial bank with an investment bank? Were we going to put people in jail for shoddy underwriting of mortgages? The fact that people always call for bankers to be jailed, but never specific bankers for specific conduct, is telling. When you’re talking about an anonymous our composite of an entire industry of people, it’s easy to project all the bad intent we consider necessary to prosecuting someone for a crime. It’s much harder when you’re talking about a specific person and his or her specific conduct. “We should send someone to jail because 35% of mortgages in this portfolio should’ve been valued this way if you used these different underwriting standards. No, he didn’t do the underwriting or tell anyone which standards to use. But he was higher on the org chart than the people who did!”

existencebox 9y ago
You seem to be selectively ignoring my core point. You're touting a narrative that distracts from the actual failure mode of these systems, repeatedly asking for the singular responsibility or legal culpability for the crisis, when that's not what I'm addressing. My focus is instead on the systemic patterns that allow for these decisions to be made _without liability_. Of course no one person decided, "let's go out and screw over mortgage holders," there was simply no natural incentive to look too hard at if that was happening; and in a political situation wherein even basic protections can't be maintained, _of course_ there wouldn't be laws to assign personal liability. It's funny that you bring up airline deregulation, as I consider that a wonderful example of exactly the pattern I'm citing. Although costs dropped, service quality followed alongside massive consolidation, soon accompanied by drops in employee pay and benefits, to the point that airlines now regularly file for bankruptcy and use that opportunity to further divest themselves of employee commitments while still giving massive bonuses to executives. (and similarly to the banks, in most of these cases _no one did anything illegal_) Yet; there is still no hope of even re-instituting regulatory regimes, let alone punitive regimes. (look at recent airline behaviors in the news re: bumping and consumer abuses, and the extremely muted responses for examples of this. While that might not directly result from deregulation, it speaks towards an extremely un-empowered consumer base) I would cap this rebuttal with a quote to directly shut down your assertion that deregulation has been "mostly positive", especially in light of your airline context, from the former CEO of American Airlines: "The consequences of deregulation have been very adverse. Our airlines, once world leaders, are now laggards in every category, including fleet age, service quality and international reputation. Fewer and fewer flights are on time. Airport congestion has become a staple of late-night comedy shows. An even higher percentage of bags are lost or misplaced. Last-minute seats are harder and harder to find. Passenger complaints have skyrocketed. Airline service, by any standard, has become unacceptable." To bring this ramble back to the point, I believe it's the wrong question to ask "what specific law did they break" when we've had a combination of conscious choice to trade worker and consumer protections for lower costs, and incentives aligned behind the powers that be to encourage that, such that even the most basic protections are non-existent, let alone a specific system of accountability.
- harryh 9y ago
vkou 9y ago
> The fact that people always call for bankers to be jailed, but never specific bankers for specific conduct, is telling. The only telling thing about is that the system is so incredibly opaque, and responsibility for harm is so diffused in it, that it's a criminal's dream. What sort of redress should we seek for their reckless behaviour? Criminal convictions, debt forgiveness, nationalization. Not a single one of them took place. Just because the public was not directly being defrauded (even though plenty of actual fraud did take place), doesn't mean that we were not impacted by the fraud that was taking place. Who was responsible for the Iraq war? Everyone was involved in the lies that lead up to it, but nobody - nobody has been held accountable. Does that mean that there wasn't a thing wrong with how the GOP dragged two countries into it? It's just an unfortunate accident that bad behaviour in bad faith brought about bad results, and we should throw our hands in the air and say: "Well, shucks! What an unfortunate accident! It would be terrible if we sought redress for it... Or changed the rules so that it wouldn't happen again."