4 ms·

He buries the lead -- its in the fifteenth paragraph: "America doesn’t criminalize bad business decisions, even when they lead to business failure"

by JackFr 13y ago

paul_f 13y ago
The article makes the assumption that criminal activity led to the financial crisis. Rather than poor policy combined with risky behavior by some, and as the above poster said, bad business decisions.
- jaydub 13y ago
  Certainly should not be a criminal offense if bad biz decisions are made in good faith. But there ought to be severe, lasting civil consequences for grossly irresponsible risk taking in breach of fiduciary responsibilities. (More than an SEC settlement that just gets written down)
  - aetherson 13y ago
    Could you explain what you have in mind? $67 million doesn't sound like a slap on the wrist (it's to a person, not the company, mind), and I'm curious what kind of "lasting" consequences you think are appropriate for civil penalties if not fines.
    - jaydub 13y ago
      My response is probably more emotional than logical and I think you raise good points but let me try to respond. How much did he actually pay out himself in the end? Mozilo's worth ~$600M according to some quick googling. $67M represents ~10% of his net worth (some of which was gained illicitly). From a risk perspective this looks like a great deal! Cheat yourself up to a big fortune and if you get caught so what? You've made it! So I do think the fine should be on the same order of magnitude as the net worth of the individual to really send a message -- and it should not be tax deductible (if it is for individuals, I believe companies can). I also think there should be a more serve and general ban from the securities industry.
      - rjsw 13y ago
        The risks should match the rewards.
mortov 13y ago
The US may not but some jurisdictions do but still have not prosecuted anyone. The UK is an example where company directors can be prosecuted for corporate mismanagement (failing in fiduciary duties http://legal.practitioner.com/regulation/standards_9_3_6.htm http://legal.practitioner.com/regulation/standards_9_3_6.htm) and there are new offences planned specifically for banking. But in fact Fred Goodwin received a handsome pay-off and has 24x7 police protection as a result of protestors arriving at his house when details of his huge bonus pay-off became public. He even obtained a super-injunction making it illegal for UK newspapers to reveal he worked as a banker ! (http://en.wikipedia.org/wiki/Fred_Goodwin#Superinjunction http://en.wikipedia.org/wiki/Fred_Goodwin#Superinjunction) edit: as someone else pointed out he did lose his knighthood but that hardly seems as severe as prison time.
gere 13y ago
Well, the line between bad business decisions and criminal behavior is not that thin in this situation. I'm not an expert on this financial crisis, but here we are talking about hiding the truth to investors and the general public, and make someone else pay for your riksy decisions. Those are not "bad business decisions".
- rayiner 13y ago
  What do you mean by "hiding the truth"? If I think Facebook stock is going to go to shit, should I tell you that before I sell you my shares? If I'm the CEO of Apple or Wal-Mart or Amazon, should I be held criminally liable for contracting to aggressively shift risk from myself to suppliers? The line between aggressive business decisions and criminal ones can be a thin one. Financial crimes are in fact a relatively new invention. Did you know that at common law, embezzlement wasn't a crime? It took a long time for the law to come to terms with the idea that there should be anything illegal about doing something with money someone voluntarily gave to you.
  - deleted 13y ago
    [deleted]

He buries the lead -- its in the fifteenth paragraph: "America doesn’t criminalize bad business decisions, even when they lead to business failure"

by JackFr 13y ago

He buries the lead -- its in the fifteenth paragraph: "America doesn’t criminalize bad business decisions, even when they lead to business failure"

paul_f 13y ago

The article makes the assumption that criminal activity led to the financial crisis. Rather than poor policy combined with risky behavior by some, and as the above poster said, bad business decisions.

jaydub 13y ago
Certainly should not be a criminal offense if bad biz decisions are made in good faith. But there ought to be severe, lasting civil consequences for grossly irresponsible risk taking in breach of fiduciary responsibilities. (More than an SEC settlement that just gets written down)
- aetherson 13y ago
  Could you explain what you have in mind? $67 million doesn't sound like a slap on the wrist (it's to a person, not the company, mind), and I'm curious what kind of "lasting" consequences you think are appropriate for civil penalties if not fines.
  - jaydub 13y ago
    My response is probably more emotional than logical and I think you raise good points but let me try to respond. How much did he actually pay out himself in the end? Mozilo's worth ~$600M according to some quick googling. $67M represents ~10% of his net worth (some of which was gained illicitly). From a risk perspective this looks like a great deal! Cheat yourself up to a big fortune and if you get caught so what? You've made it! So I do think the fine should be on the same order of magnitude as the net worth of the individual to really send a message -- and it should not be tax deductible (if it is for individuals, I believe companies can). I also think there should be a more serve and general ban from the securities industry.
    - rjsw 13y ago
      The risks should match the rewards.

mortov 13y ago

The US may not but some jurisdictions do but still have not prosecuted anyone. The UK is an example where company directors can be prosecuted for corporate mismanagement (failing in fiduciary duties http://legal.practitioner.com/regulation/standards_9_3_6.htm http://legal.practitioner.com/regulation/standards_9_3_6.htm) and there are new offences planned specifically for banking. But in fact Fred Goodwin received a handsome pay-off and has 24x7 police protection as a result of protestors arriving at his house when details of his huge bonus pay-off became public. He even obtained a super-injunction making it illegal for UK newspapers to reveal he worked as a banker ! (http://en.wikipedia.org/wiki/Fred_Goodwin#Superinjunction http://en.wikipedia.org/wiki/Fred_Goodwin#Superinjunction) edit: as someone else pointed out he did lose his knighthood but that hardly seems as severe as prison time.

gere 13y ago

Well, the line between bad business decisions and criminal behavior is not that thin in this situation. I'm not an expert on this financial crisis, but here we are talking about hiding the truth to investors and the general public, and make someone else pay for your riksy decisions. Those are not "bad business decisions".

rayiner 13y ago
What do you mean by "hiding the truth"? If I think Facebook stock is going to go to shit, should I tell you that before I sell you my shares? If I'm the CEO of Apple or Wal-Mart or Amazon, should I be held criminally liable for contracting to aggressively shift risk from myself to suppliers? The line between aggressive business decisions and criminal ones can be a thin one. Financial crimes are in fact a relatively new invention. Did you know that at common law, embezzlement wasn't a crime? It took a long time for the law to come to terms with the idea that there should be anything illegal about doing something with money someone voluntarily gave to you.
- deleted 13y ago
  [deleted]