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My friend, fraud has been illegal for centuries. Stiglitz is asking for something new to be considered a form of fraud. Please take a moment and think about thi
by lkrubner 16y ago
My friend, fraud has been illegal for centuries. Stiglitz is asking for something new to be considered a form of fraud. Please take a moment and think about this clearly. If Stiglitz was simply saying "Fraud should be illegal" then this wouldn't be much of a story, since fraud is already illegal. But Stiglitz is saying "Gambling recklessly with credit should be considered a form of fraud." He wants to take a formerly non-criminal behavior and treat it as a form of criminal behavior.
- SkyMarshal 16y agoActually, in this specific case, some of the practices of Wall Street were previously criminal. For example, up until 2004 there were laws that limited bank leverage to iirc 12:1 (or was it 14:1?). Hank Paulson lobbied for that limit to be removed, unsuccessfully in 2000, then successfully in 2004. That banks and financial entities were levered up to 30:1, 40:1, even 60:1 on toxic securities when the crisis occurred grossly exacerbated it. So essentially, 'gambling recklessly with credit' was indeed, for a long time, illegal. It was only Wall Street's increasing influence in Washington that got it legalized.
- deleted 16y ago[deleted]
- lkrubner 16y agoSkymarshall: Yes, but in the old days, if a bank went over the leverage limit that the government had set, then the bank got fined, and was required to rapidly deleverage. No one went to jail.