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What about moral hazard? People have forgotten about responsibility because the nanny state comes to the rescue every time anyone cries momma.

deleted 3y ago
[deleted]
FrustratedMonky 3y ago
We should be able to have both. Government that smooths out the bumps. Provides some 'smoothing' to society so it doesn't crater and fall apart. While also holding people accountable and criminally charging corporate executives. It does seem like there is some reductionism to just crying 'nanny', since the same people that dislike the 'nanny' state also complain when the 'nanny' wants to hold people accountable, since they should be free to cheat. Yelling 'Freedom' anytime the state steps in. You can't have both, complain when the state is a 'nanny' and helping, and then complain when the state disciplines people, the 'nanny' when stopping the child from doing things that will hurt itself.
Aunche 3y ago
Most banks saw their valuation drop by 90+% during the recession. Is that enough responsibility considering that banks employed millions of people, the majority of which and nothing to do with mortgages?
- no_wizard 3y ago
  In a word, no. Why weren't executives and boardrooms held liable? That would have been a great start. Actually putting teeth behind regulations, clawing back bonuses and invalidating golden parachutes and culpable executives going to prison, preferably for a long time. None of the executives involved should legally be allowed to work in finance again. If I as an individual pulled the stunts they did, or a smaller organization did, they'd be labeled fraudsters and prosecuted to the fullest extent of the law. What TARP and its aftermath proves is that if you're big enough, you escape all real liability for your actions, and the public and your employees get to suffer the consequences. Why should executives and boardrooms be left off the hook while the American public pays the price?
JumpCrisscross 3y ago
> What about moral hazard? Less than a year ago, we suffered the second, third and fourth largest bank failures in our nation's history [1]. Shareholders were zeroed. [1] https://en.wikipedia.org/wiki/List_of_largest_bank_failures_in_the_United_States https://en.wikipedia.org/wiki/List_of_largest_bank_failures_...
- bugbuddy 3y ago
  Those were also cases where the power-that-be decided to change the laws and regulations on the fly and removed the FDIC insurance limit to protect their friends in high places.
  - JumpCrisscross 3y ago
    > the power-that-be decided to change the laws and regulations on the fly and removed the FDIC insurance limit to protect their friends in high places No laws were changed. The FDIC always had broad discretion in managing assets and liabilities under receivorship. You are correct, however, in that a precedent was set. Where you are incorrect is in the friends in high places bit. I was near (though not on) ground zero in those crises, and to the degree politics were involved, it was in the goodwill that would have resulted from visibly screwing certain Silicon Valley elites. If Signature hadn't failed, there is a good chance SVB's depositors would have been capped at the legal limit.

deleted 3y ago

[deleted]

FrustratedMonky 3y ago

We should be able to have both. Government that smooths out the bumps. Provides some 'smoothing' to society so it doesn't crater and fall apart. While also holding people accountable and criminally charging corporate executives. It does seem like there is some reductionism to just crying 'nanny', since the same people that dislike the 'nanny' state also complain when the 'nanny' wants to hold people accountable, since they should be free to cheat. Yelling 'Freedom' anytime the state steps in. You can't have both, complain when the state is a 'nanny' and helping, and then complain when the state disciplines people, the 'nanny' when stopping the child from doing things that will hurt itself.

Aunche 3y ago

Most banks saw their valuation drop by 90+% during the recession. Is that enough responsibility considering that banks employed millions of people, the majority of which and nothing to do with mortgages?

no_wizard 3y ago
In a word, no. Why weren't executives and boardrooms held liable? That would have been a great start. Actually putting teeth behind regulations, clawing back bonuses and invalidating golden parachutes and culpable executives going to prison, preferably for a long time. None of the executives involved should legally be allowed to work in finance again. If I as an individual pulled the stunts they did, or a smaller organization did, they'd be labeled fraudsters and prosecuted to the fullest extent of the law. What TARP and its aftermath proves is that if you're big enough, you escape all real liability for your actions, and the public and your employees get to suffer the consequences. Why should executives and boardrooms be left off the hook while the American public pays the price?

JumpCrisscross 3y ago

> What about moral hazard? Less than a year ago, we suffered the second, third and fourth largest bank failures in our nation's history [1]. Shareholders were zeroed. [1] https://en.wikipedia.org/wiki/List_of_largest_bank_failures_in_the_United_States https://en.wikipedia.org/wiki/List_of_largest_bank_failures_...

bugbuddy 3y ago
Those were also cases where the power-that-be decided to change the laws and regulations on the fly and removed the FDIC insurance limit to protect their friends in high places.
- JumpCrisscross 3y ago
  > the power-that-be decided to change the laws and regulations on the fly and removed the FDIC insurance limit to protect their friends in high places No laws were changed. The FDIC always had broad discretion in managing assets and liabilities under receivorship. You are correct, however, in that a precedent was set. Where you are incorrect is in the friends in high places bit. I was near (though not on) ground zero in those crises, and to the degree politics were involved, it was in the goodwill that would have resulted from visibly screwing certain Silicon Valley elites. If Signature hadn't failed, there is a good chance SVB's depositors would have been capped at the legal limit.