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The tone of this article is really weird. It openly admits that various banks we're being constrained due to their notorious bad behavior, but casts those cons

The tone of this article is really weird. It openly admits that various banks we're being constrained due to their notorious bad behavior, but casts those constraints in a passively negative light, and then tacitly celebrates that these bad actors are now less constrained to act badly.

slededit 8y ago
During that time period I held investments in JPM. This was material information that should have been available to investors.
hnmonkey 8y ago
Yeah it's a pretty odd article. It seems like things were working as they're supposed to and yet it implies that it's gonna be great now that the regulations have been lifted by the Trump admin. Unfortunately though, I'd imagine the banks will just continue with their bad behavior now that the shackles are off and it seems like there won't be anything in their way to slow down or halt their plans. Doesn't seem like a good thing really...
- wallace_f 8y ago
  I don't find it odd. Economists are typically skeptical of government picking winners and losers. Here this is mentioned as the result of an unwritten rule, and as the title says, it was not done transparently.
  - jmlsf 8y ago
    How did you go from "punishment for multiple crimes and regulatory violations" to "picking winners and losers"? Economists typically think laws governing fraud should be enforced.
    - AnthonyMouse 8y ago
      Laws should also be transparent. If there is a crime, the punishment should be known in advance and be imposed openly. How else will it act as a deterrent?
    - wallace_f 8y ago
      But that's not what happened. The law was an "unwritten rule" which was enforced in secret. As another user here stated, regulatory law needs to be enforced openly and transparently.
  - drb91 8y ago
    You could also use this argument to imply we should have allowed banks to fail in the mortgage crisis.
    - AnthonyMouse 8y ago
      What we should have done is saved the banks only to break them up. And it's not too late to do just that.
    - wallace_f 8y ago
      In fact, at that time, mainstream economists expressed the same concern which I am expressing now: gregmankiw.blogspot.com/2008/12/
      - hnmonkey 8y ago
        This is not the same concern you're expressing unfortunately. You're arguing elsewhere that the government punishing outright fraud is manipulating the market and choosing winners and losers. I see nothing about that at your link and nothing that defends your belief in that. He's saying that the fed and the government should step in and make decisions about trying to buoy the market, which is what you want them to do when the economy might go belly up so that people don't all lose their jobs and riot and starve. I do see that it's where you got the phrase 'government should pick winners and losers' from however but the context is vastly different than what the original article we're commenting on is about.
        wallace_f 8y ago
        I dont disagree that JP Morgan should not be punished. I already explained that. You're confusing some things. Another example of your confusion is you mentioned here that the government is punishing fraud; but in reality, they punished them in secret for "unwritten rules" which were broken. A regulator should not pick and choose who to punish, in secret, and for unwritten rules. That's ridiculous, and this kind of secrecy and ambiguity is not an example of good governance, fair treatment, or competitive markets. In a competitive market where government treat everyone equally (no picking winners and losers) everyone abides by the same rules, transparently. That's not what happened. In fact, when government decides to meddle in markets in secret and without any written rule or law, this raises fear of exactly that. Probably in this case, the end result seems to be not unjust, but the method is horrible, and I have no idea why they did it this way. And yes, this kind of market meddling, or "picking winners or losere," is a type of market meddling, not unlike what I linked to. I would suggest going back over the article to see where your confusion started, and also the posts here, and my other response to you.
  - hnmonkey 8y ago
    It's not picking winners and losers in any sense of that phrase. They are literally punishing the bank for bad behavior and that's to be expected from what a regulator should be doing. If someone breaks the law and you send that person to jail you're not picking winners and losers in any way. You're meting out discipline as needed to punish the bad behavior and try to make it so that it doesn't happen again. Also can you show where economists are skeptical of government picking winners and losers since the government has been doing it for ages and the economy has been marching on for a long while. In fact, picking winners and losers in the 2008 recession is what led to moving out of the recession.
    - wallace_f 8y ago
      >t's not picking winners and losers in any sense of that phrase. They are literally punishing the bank for bad behavior This response repeats the confusion that I just responded to, and tried to correct. Note that my post does not actually disagree with enforcement of regulatory authority. I also believe that regulators should enforce their regulations. What I pointed to was something different than this. >If someone breaks the law and you send that person to jail But that's not a valid comparison. I think this is where you, and others, are confused. The judicial branch has the authority to enforce laws for breaking crimes. That's what you're comparing this to. Regulators also have authority to enforce regulatory law. But what is happening is that a regulator is arguably not using their regulatory authority appropriately. They are, "behind closed doors," and using "unwritten rules" using their authority to punish a company for bad behavior. The problems here are of transparency, accountability, fairness, competitiveness, and freedom. I could agree with you if I believed the regulator can do no wrong, but I don't believe that.
      - dd36 8y ago
        Regulators enforce laws too... They are the banking police. JPMorgan has the resources to fight the regulator in court if it’s exceeded its scope. It happens all the time.
        wallace_f 8y ago
travmatt 8y ago
The best part is how scrupulously Michelle Davis avoided any uncomfortable mentions of the crimes that brought said punishments. Wells Fargo’s business tactic of forcing their sales staff to commit fraud and identity theft is instead described as “a pattern of lapses and abuses”.
- rayiner 8y ago
  > Wells Fargo’s business tactic of forcing their sales staff to commit fraud and identity theft That’s just a dishonest characterization. Wells Fargo didn’t “force” their staff to do any such thing. Staff gamed an incentive structure and WF didn’t catch it. “Lapse” is the most accurate characterization.
  - dd36 8y ago
    Coercion combined with ignoring customer complaints is the most accurate characterization.
    - rayiner 8y ago
      No. Words have meaning. Forcing someone to do something means coercion + intent to achieve a specific outcome. There was no evidence that WF intended anyone to commit identity fraud. You don’t get to redefine the meaning of well understood words.
      - dd36 8y ago
        There was a decade of complaints and more than enough to connect the dots. Looking the other way because you like the results goes to intent. Threatening ones job unless they sign up X many customers for a product is coercion. Sales quotas are inherently coercive. If you choose to do zero quality control and employees learn cheating is okay then it is bad.
        leoc 8y ago
        https://en.wikipedia.org/wiki/Control_fraud https://en.wikipedia.org/wiki/Control_fraud
ackidacki 8y ago
It's pretty bad if you ask me. A governments job is to follow the law too and not use its discretion in 'unwritten law' that is secretive. No problem if they publicly said they would do this, but this way is precisely the problem of developing countries. You wouldn't think it would happen in America.
- jayd16 8y ago
  Lots of court filings and records are sealed. Its really not surprising at all. It's not really unwritten law just because it wasn't public.
- specialp 8y ago
  Well their job (The Office of the Comptroller of the Currency[1]) by law is to regulate banks for systemic risk. Recall that this same government bailed out the banks due to systemic risks. JP Morgan is then participating in risky activities and wants to expand thus becoming more important in the banking system. The government pushes back as it has had transgressions. The whole "unwritten rule" thing is kinda nonsense. The OCC which was preventing the expansion was chartered to ensure the soundness of the banking system. That is pretty arbitrary and they have the authority to arbitrate on that. That sounds like they can use their discretion. What you would think would not happen in America is that the government bails out private banks that behaved badly. If it were truly American capitalism they would fail. Banks would then not be able to become so large due to people and banks not wanting to have too much liability with any one institution. So it is inconsistent to have a system where the government cannot use their discretion in the growth of banks, yet be on the line for a huge bailout to stop the economy from collapsing when the banks get too greedy. [1] https://en.wikipedia.org/wiki/Office_of_the_Comptroller_of_the_Currency https://en.wikipedia.org/wiki/Office_of_the_Comptroller_of_t...
  - ackidacki 8y ago
    I think you're mixing up the OCC with the Fed.
  - aldoushuxley001 8y ago
deleted 8y ago
[deleted]
pfarnsworth 8y ago
Agreed. I was curious what this was above, then as I started reading it, I was saying to myself "wait, I thought this was actually well-known that these TBTF banks were being curtailed out of punishment for their behavior." I don't see how this was secret, nor do I think it was even a problem since they appear to have been doing extremely well since then even with their growth "halted".
mmanfrin 8y ago
Recently, Bloomberg has had some very stilted articles -- editorial tone pushed in to articles and choice of coverage. It feels odd, and it feels wrong.
- mohammedbin 8y ago
  They and some other finance newspapers do seem like the last bastion of separation of facts and opinions
- intended 8y ago
  Dunno, this article seems pretty much par for the course when it comes to reporting by financial magazines on industry. Pro business (especially finance), anti regulation, with little respect or care for regulations and no admission of culpability and harm.
JumpCrisscross 8y ago
> tone of this article is really weird The limits make sense, the secrecy not so much. That guarantees an odd tone for an article to be read by (a) JPMorgan Chase shareholders and (b) Americans who don’t want another financial crisis.
cheriot 8y ago
That's common when the financial press is talking about financial companies. Remember their audience. Edit: I'm mainly thinking of Bloomberg and WSJ. The Economist is better on this one.
mrhappyunhappy 8y ago
Of course, that evil Obama administration, they punished little billy for not playing nice, boohoo.

slededit 8y ago

During that time period I held investments in JPM. This was material information that should have been available to investors.

hnmonkey 8y ago

Yeah it's a pretty odd article. It seems like things were working as they're supposed to and yet it implies that it's gonna be great now that the regulations have been lifted by the Trump admin. Unfortunately though, I'd imagine the banks will just continue with their bad behavior now that the shackles are off and it seems like there won't be anything in their way to slow down or halt their plans. Doesn't seem like a good thing really...

wallace_f 8y ago
I don't find it odd. Economists are typically skeptical of government picking winners and losers. Here this is mentioned as the result of an unwritten rule, and as the title says, it was not done transparently.
- jmlsf 8y ago
  How did you go from "punishment for multiple crimes and regulatory violations" to "picking winners and losers"? Economists typically think laws governing fraud should be enforced.
  - AnthonyMouse 8y ago
    Laws should also be transparent. If there is a crime, the punishment should be known in advance and be imposed openly. How else will it act as a deterrent?
  - wallace_f 8y ago
    But that's not what happened. The law was an "unwritten rule" which was enforced in secret. As another user here stated, regulatory law needs to be enforced openly and transparently.
- drb91 8y ago
  You could also use this argument to imply we should have allowed banks to fail in the mortgage crisis.
  - AnthonyMouse 8y ago
    What we should have done is saved the banks only to break them up. And it's not too late to do just that.
  - wallace_f 8y ago
    In fact, at that time, mainstream economists expressed the same concern which I am expressing now: gregmankiw.blogspot.com/2008/12/
    - hnmonkey 8y ago
      This is not the same concern you're expressing unfortunately. You're arguing elsewhere that the government punishing outright fraud is manipulating the market and choosing winners and losers. I see nothing about that at your link and nothing that defends your belief in that. He's saying that the fed and the government should step in and make decisions about trying to buoy the market, which is what you want them to do when the economy might go belly up so that people don't all lose their jobs and riot and starve. I do see that it's where you got the phrase 'government should pick winners and losers' from however but the context is vastly different than what the original article we're commenting on is about.
      - wallace_f 8y ago
        I dont disagree that JP Morgan should not be punished. I already explained that. You're confusing some things. Another example of your confusion is you mentioned here that the government is punishing fraud; but in reality, they punished them in secret for "unwritten rules" which were broken. A regulator should not pick and choose who to punish, in secret, and for unwritten rules. That's ridiculous, and this kind of secrecy and ambiguity is not an example of good governance, fair treatment, or competitive markets. In a competitive market where government treat everyone equally (no picking winners and losers) everyone abides by the same rules, transparently. That's not what happened. In fact, when government decides to meddle in markets in secret and without any written rule or law, this raises fear of exactly that. Probably in this case, the end result seems to be not unjust, but the method is horrible, and I have no idea why they did it this way. And yes, this kind of market meddling, or "picking winners or losere," is a type of market meddling, not unlike what I linked to. I would suggest going back over the article to see where your confusion started, and also the posts here, and my other response to you.
- hnmonkey 8y ago
  It's not picking winners and losers in any sense of that phrase. They are literally punishing the bank for bad behavior and that's to be expected from what a regulator should be doing. If someone breaks the law and you send that person to jail you're not picking winners and losers in any way. You're meting out discipline as needed to punish the bad behavior and try to make it so that it doesn't happen again. Also can you show where economists are skeptical of government picking winners and losers since the government has been doing it for ages and the economy has been marching on for a long while. In fact, picking winners and losers in the 2008 recession is what led to moving out of the recession.
  - wallace_f 8y ago
    >t's not picking winners and losers in any sense of that phrase. They are literally punishing the bank for bad behavior This response repeats the confusion that I just responded to, and tried to correct. Note that my post does not actually disagree with enforcement of regulatory authority. I also believe that regulators should enforce their regulations. What I pointed to was something different than this. >If someone breaks the law and you send that person to jail But that's not a valid comparison. I think this is where you, and others, are confused. The judicial branch has the authority to enforce laws for breaking crimes. That's what you're comparing this to. Regulators also have authority to enforce regulatory law. But what is happening is that a regulator is arguably not using their regulatory authority appropriately. They are, "behind closed doors," and using "unwritten rules" using their authority to punish a company for bad behavior. The problems here are of transparency, accountability, fairness, competitiveness, and freedom. I could agree with you if I believed the regulator can do no wrong, but I don't believe that.
    - dd36 8y ago
      Regulators enforce laws too... They are the banking police. JPMorgan has the resources to fight the regulator in court if it’s exceeded its scope. It happens all the time.
      - wallace_f 8y ago

travmatt 8y ago

The best part is how scrupulously Michelle Davis avoided any uncomfortable mentions of the crimes that brought said punishments. Wells Fargo’s business tactic of forcing their sales staff to commit fraud and identity theft is instead described as “a pattern of lapses and abuses”.

rayiner 8y ago
> Wells Fargo’s business tactic of forcing their sales staff to commit fraud and identity theft That’s just a dishonest characterization. Wells Fargo didn’t “force” their staff to do any such thing. Staff gamed an incentive structure and WF didn’t catch it. “Lapse” is the most accurate characterization.
- dd36 8y ago
  Coercion combined with ignoring customer complaints is the most accurate characterization.
  - rayiner 8y ago
    No. Words have meaning. Forcing someone to do something means coercion + intent to achieve a specific outcome. There was no evidence that WF intended anyone to commit identity fraud. You don’t get to redefine the meaning of well understood words.
    - dd36 8y ago
      There was a decade of complaints and more than enough to connect the dots. Looking the other way because you like the results goes to intent. Threatening ones job unless they sign up X many customers for a product is coercion. Sales quotas are inherently coercive. If you choose to do zero quality control and employees learn cheating is okay then it is bad.
      - leoc 8y ago
        https://en.wikipedia.org/wiki/Control_fraud https://en.wikipedia.org/wiki/Control_fraud

ackidacki 8y ago

It's pretty bad if you ask me. A governments job is to follow the law too and not use its discretion in 'unwritten law' that is secretive. No problem if they publicly said they would do this, but this way is precisely the problem of developing countries. You wouldn't think it would happen in America.

jayd16 8y ago
Lots of court filings and records are sealed. Its really not surprising at all. It's not really unwritten law just because it wasn't public.
specialp 8y ago
Well their job (The Office of the Comptroller of the Currency[1]) by law is to regulate banks for systemic risk. Recall that this same government bailed out the banks due to systemic risks. JP Morgan is then participating in risky activities and wants to expand thus becoming more important in the banking system. The government pushes back as it has had transgressions. The whole "unwritten rule" thing is kinda nonsense. The OCC which was preventing the expansion was chartered to ensure the soundness of the banking system. That is pretty arbitrary and they have the authority to arbitrate on that. That sounds like they can use their discretion. What you would think would not happen in America is that the government bails out private banks that behaved badly. If it were truly American capitalism they would fail. Banks would then not be able to become so large due to people and banks not wanting to have too much liability with any one institution. So it is inconsistent to have a system where the government cannot use their discretion in the growth of banks, yet be on the line for a huge bailout to stop the economy from collapsing when the banks get too greedy. [1] https://en.wikipedia.org/wiki/Office_of_the_Comptroller_of_the_Currency https://en.wikipedia.org/wiki/Office_of_the_Comptroller_of_t...
- ackidacki 8y ago
  I think you're mixing up the OCC with the Fed.
- aldoushuxley001 8y ago

deleted 8y ago

[deleted]

pfarnsworth 8y ago

Agreed. I was curious what this was above, then as I started reading it, I was saying to myself "wait, I thought this was actually well-known that these TBTF banks were being curtailed out of punishment for their behavior." I don't see how this was secret, nor do I think it was even a problem since they appear to have been doing extremely well since then even with their growth "halted".

mmanfrin 8y ago

Recently, Bloomberg has had some very stilted articles -- editorial tone pushed in to articles and choice of coverage. It feels odd, and it feels wrong.

mohammedbin 8y ago
They and some other finance newspapers do seem like the last bastion of separation of facts and opinions
intended 8y ago
Dunno, this article seems pretty much par for the course when it comes to reporting by financial magazines on industry. Pro business (especially finance), anti regulation, with little respect or care for regulations and no admission of culpability and harm.

JumpCrisscross 8y ago

> tone of this article is really weird The limits make sense, the secrecy not so much. That guarantees an odd tone for an article to be read by (a) JPMorgan Chase shareholders and (b) Americans who don’t want another financial crisis.

cheriot 8y ago

That's common when the financial press is talking about financial companies. Remember their audience. Edit: I'm mainly thinking of Bloomberg and WSJ. The Economist is better on this one.

mrhappyunhappy 8y ago

Of course, that evil Obama administration, they punished little billy for not playing nice, boohoo.