5 ms·

Came here to mention what's linked to in @comatose_kid's response. There have been some really huge settlements with many/most of the banks, but it's happened s

Came here to mention what's linked to in @comatose_kid's response. There have been some really huge settlements with many/most of the banks, but it's happened so long after the fact, it's kind of out of the limelight. Obama's DOJ really hasn't gotten a lot of political mileage out any of it at all.

toomuchtodo 12y ago
If they want political mileage, settlements are useless. You'll need to dismantle organizations, similar to what happened to Arthur Anderson after Enron.
- anigbrowl 12y ago
  That would generate political mileage with the left, but probably generate howls of 'socialism!' from the right, since the systemic nature of the financial crisis and the widespread abuses would mean multiple institutions being dismantled or split up. Financial crimes are generally slow and difficult to prosecute because of the vast quantity of documentation that has to be sifted through for evidence, so when you look at the DoJ's financial fraud page you see a bias towards smaller firms - not necessarily because they're weaker legally, but simply because it's easier to pinpoint individuals (eg some of the insider trading prosecutions). Another issue specific to the financial crisis is that in some cases large firms erred by being negligent and/or overconfident in their market strategies, resulting in huge losses and/or bailouts, but they imprudent rather than mendacious and their conduct did not cross the line into criminality. In a normal market those firms would have gone out of business and things would have been resolved through civil lawsuits, which was what happened with Lehman bros. and Bear Stearns. But in the financial crisis so many institutions were over-leveraged, and so many markets were moving in sync with each other (eg Europe and US both having huge housing bubbles) that the options were government stepping in to backstop the financial industry as a whole or the collapse of the payment system, which would have been a disaster. Getting back to politics, my read of the US landscape is that about 20% of the US electorate leans to the left and wouldn't object to hanging all the bankers. About 30% leans to the right, and they've convinced themselves that the whole financial crisis was caused by Those Bums on Welfare and the Democratic party who forced the banks to give money to TBoW. The other 50% of the electorate is more fact- than narrative-driven and while they have misgivings about who should bear responsibility for the crisis they're also more pragmatic and primarily concerned about economic stability. There's a danger in this, insofar as many of the socioeconomic conditions that led up to the crisis remain unresolved or have even worsened in some respects, which means greater political tension and potential for crises; on the other hand revolutionary change is notoriously difficult to manage which is why no developed country has so far attempted to grasp that particular nettle.
narsk 12y ago
A couple of things about these settlements. The settlement amount is a large number but these "landmark" settlements don't seem to come anywhere close to the spoils gained by criminal activity. Combine that with the deferred prosecution agreements that come with a lot of these settlements and we're in a spot where shareholders foot the loss on the penalty and those that absolutely did commit and benefit from committing ridiculous crimes can't end up in jail. I don't really care about settlement amounts in dollars. I'd like to see criminals end up in jail.

toomuchtodo 12y ago

If they want political mileage, settlements are useless. You'll need to dismantle organizations, similar to what happened to Arthur Anderson after Enron.

anigbrowl 12y ago
That would generate political mileage with the left, but probably generate howls of 'socialism!' from the right, since the systemic nature of the financial crisis and the widespread abuses would mean multiple institutions being dismantled or split up. Financial crimes are generally slow and difficult to prosecute because of the vast quantity of documentation that has to be sifted through for evidence, so when you look at the DoJ's financial fraud page you see a bias towards smaller firms - not necessarily because they're weaker legally, but simply because it's easier to pinpoint individuals (eg some of the insider trading prosecutions). Another issue specific to the financial crisis is that in some cases large firms erred by being negligent and/or overconfident in their market strategies, resulting in huge losses and/or bailouts, but they imprudent rather than mendacious and their conduct did not cross the line into criminality. In a normal market those firms would have gone out of business and things would have been resolved through civil lawsuits, which was what happened with Lehman bros. and Bear Stearns. But in the financial crisis so many institutions were over-leveraged, and so many markets were moving in sync with each other (eg Europe and US both having huge housing bubbles) that the options were government stepping in to backstop the financial industry as a whole or the collapse of the payment system, which would have been a disaster. Getting back to politics, my read of the US landscape is that about 20% of the US electorate leans to the left and wouldn't object to hanging all the bankers. About 30% leans to the right, and they've convinced themselves that the whole financial crisis was caused by Those Bums on Welfare and the Democratic party who forced the banks to give money to TBoW. The other 50% of the electorate is more fact- than narrative-driven and while they have misgivings about who should bear responsibility for the crisis they're also more pragmatic and primarily concerned about economic stability. There's a danger in this, insofar as many of the socioeconomic conditions that led up to the crisis remain unresolved or have even worsened in some respects, which means greater political tension and potential for crises; on the other hand revolutionary change is notoriously difficult to manage which is why no developed country has so far attempted to grasp that particular nettle.

narsk 12y ago

A couple of things about these settlements. The settlement amount is a large number but these "landmark" settlements don't seem to come anywhere close to the spoils gained by criminal activity. Combine that with the deferred prosecution agreements that come with a lot of these settlements and we're in a spot where shareholders foot the loss on the penalty and those that absolutely did commit and benefit from committing ridiculous crimes can't end up in jail. I don't really care about settlement amounts in dollars. I'd like to see criminals end up in jail.