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Until you start throwing executives in prison, nothing will change long term. 10 figure fines are nothing compared to how much many Americans lost in the housin

Until you start throwing executives in prison, nothing will change long term. 10 figure fines are nothing compared to how much many Americans lost in the housing market crash. Consider how many people got foreclosed upon improperly. The loss of quality of life (and actual life) due to Wall Street greed is unmeasurable, but surely more than 10 figures.

Ntrails 9y ago
I acknowledge that I'm in the minority but I find it really hard to understand the idea that "The secured loan you took out and can no longer afford to pay? They're going to take the collateral" isn't the whole fucking point of a mortgage. This idea that the banks foreclosing is somehow a sign of greed boggles my mind. Now, sure there is a bunch of consumer protection around to help 'honest Joe' out when times are tough - but it isn't going to magically stop a crunch point coming where either you keep paying off the loan or you lose the house.
- rrcaptain 9y ago
  It's rather that banks foreclosed on houses that weren't in default for long enough to warrant forclosure. And that they skipped due process and didn't actually make sure they were properly forclosing. There's the famous John Oliver sketch regarding a bank that tried to forclose on a house that didn't even have a mortgage. And then when the people tried to collect their legal fees, the bank wouldn't pay, leading them to foreclose on the bank. In addition, many of the mortgages that were issued should never have been done so. They deliberately and knowingly issued mortgages that they knew were far more risky than they actually were.
  - Ntrails 9y ago
    105% mortgages were given out on homes that hadn't finished being built with no money down. The lending was idiotic - but so was the borrowing. There's a distinct implication that banks are entirely responsible for managing credit risk from repayment risk. That's explicitly false _and the whole point of backing the loan with assets_. Take away the right to foreclose and the banks will simply stop lending to basically everyone except those who can trivially afford the repayments. I'd be surprised if the rate of genuinely illegal foreclosures was > 5%, maybe I'm wrong on that. In essence though I can't help but wonder when people will take responsibility for what they borrowed.
deleted 9y ago
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brazzy 9y ago
Fines and damages are different things. Damage payments would be meant to actually compensate for the amount of damage caused, but where exactly is an "unmeasurable" amount of money going to come from? Additionally, if you did make Wall Street pay "unmeasurable" damage and all of it went bankrupt and disappeared, the result would be worse for everyone. Yeah, that's not fair, but such is life. On the other hand, the point of a fine is to discourage unwanted behaviour. To have that effect, it only needs to be larger than the profit from the unwanted behaviour, and 10 figures is probably large enough for that.
yellowstuff 9y ago
This is definitely the conventional wisdom I see here and on Reddit, but I disagree. Banking has changed, perhaps permanently. It is less profitable and by many measures less risky than before. And I disagree with throwing people in prison for losing money and hurting the economy. I want people to go to prison because they have committed crimes. The government could certainly have been more aggressive about charging individuals, but if you look at the cases they actually brought they were against low level people and they had a lot of trouble showing any of them actually broke laws. Most of the actually harmful decisions by high level bankers were not clearly illegal.
- rrcaptain 9y ago
  >Banking has changed, perhaps permanently. It is less profitable and by many measures less risky than before. Banking has "changed" many times before. But these incidents keep happening. The dot-com bubble, the Great Depression, and currently the student loan crisis, municipal debt crisis and subprime auto loans.

Ntrails 9y ago

I acknowledge that I'm in the minority but I find it really hard to understand the idea that "The secured loan you took out and can no longer afford to pay? They're going to take the collateral" isn't the whole fucking point of a mortgage. This idea that the banks foreclosing is somehow a sign of greed boggles my mind. Now, sure there is a bunch of consumer protection around to help 'honest Joe' out when times are tough - but it isn't going to magically stop a crunch point coming where either you keep paying off the loan or you lose the house.

rrcaptain 9y ago
It's rather that banks foreclosed on houses that weren't in default for long enough to warrant forclosure. And that they skipped due process and didn't actually make sure they were properly forclosing. There's the famous John Oliver sketch regarding a bank that tried to forclose on a house that didn't even have a mortgage. And then when the people tried to collect their legal fees, the bank wouldn't pay, leading them to foreclose on the bank. In addition, many of the mortgages that were issued should never have been done so. They deliberately and knowingly issued mortgages that they knew were far more risky than they actually were.
- Ntrails 9y ago
  105% mortgages were given out on homes that hadn't finished being built with no money down. The lending was idiotic - but so was the borrowing. There's a distinct implication that banks are entirely responsible for managing credit risk from repayment risk. That's explicitly false _and the whole point of backing the loan with assets_. Take away the right to foreclose and the banks will simply stop lending to basically everyone except those who can trivially afford the repayments. I'd be surprised if the rate of genuinely illegal foreclosures was > 5%, maybe I'm wrong on that. In essence though I can't help but wonder when people will take responsibility for what they borrowed.

deleted 9y ago

[deleted]

brazzy 9y ago

Fines and damages are different things. Damage payments would be meant to actually compensate for the amount of damage caused, but where exactly is an "unmeasurable" amount of money going to come from? Additionally, if you did make Wall Street pay "unmeasurable" damage and all of it went bankrupt and disappeared, the result would be worse for everyone. Yeah, that's not fair, but such is life. On the other hand, the point of a fine is to discourage unwanted behaviour. To have that effect, it only needs to be larger than the profit from the unwanted behaviour, and 10 figures is probably large enough for that.

yellowstuff 9y ago

This is definitely the conventional wisdom I see here and on Reddit, but I disagree. Banking has changed, perhaps permanently. It is less profitable and by many measures less risky than before. And I disagree with throwing people in prison for losing money and hurting the economy. I want people to go to prison because they have committed crimes. The government could certainly have been more aggressive about charging individuals, but if you look at the cases they actually brought they were against low level people and they had a lot of trouble showing any of them actually broke laws. Most of the actually harmful decisions by high level bankers were not clearly illegal.

rrcaptain 9y ago
>Banking has changed, perhaps permanently. It is less profitable and by many measures less risky than before. Banking has "changed" many times before. But these incidents keep happening. The dot-com bubble, the Great Depression, and currently the student loan crisis, municipal debt crisis and subprime auto loans.