8 ms·

You know who never goes to jail? Regulators. Madoff, for instance, moved from Wall Street into a cell where he belongs, refuting the above headline. His regula

by _yosefk 12y ago

You know who never goes to jail? Regulators. Madoff, for instance, moved from Wall Street into a cell where he belongs, refuting the above headline. His regulators, however, weren't even charged with anything AFAIK. That despite their inaction for many years being either criminal negligence or the result of being bribed. (From http://www.bloombergview.com/articles/2014-01-07/jpmorgan-pays-for-shorting-madoff-without-telling-anyone http://www.bloombergview.com/articles/2014-01-07/jpmorgan-pa... - "The government regulators, led by the Securities and Exchange Commission, also didn't catch Bernie Madoff, even though they were his regulators and that was literally their job. And while yes JPMorgan ignored some red flags, so did the SEC. Like, the many many credible letters they got to the effect of "Bernie Madoff is a big ol' Ponzi scheme." Should the SEC be paying an even bigger penalty than $1.7 billion?")

Lawtonfogle 12y ago
>You know who never goes to jail? Regulators. Are they paid enough for that increase in risk? I don't know what they make, but other government positions are already underpaid compared to their private sector equivalents. Making them come with a risk of jail time for failing ones job too badly will only result in even less qualified people filling those positions.
- tapp 12y ago
  I've often thought that we should pay financial regulators competitively with what they could make in the private sector AND in conjunction institute some kind of sweeping moratorium (e.g. you may not take any corresponding job in the private sector for at least 10 years after your government service ends.) I'm sure this would be politically untenable. Headlines would cry about absurd salaries being given to government employees. However I'm equally confident it would save us money in the long run. The current system seems almost designed to create toothless regulators and a revolving door.
  - Lawtonfogle 12y ago
    I dare say the majority of government waste and other problems are simply a case of 'you get what you pay for'.
shas3 12y ago
What's the basis for sending regulators to jail? Will you send cops to prison when crimes happen, because they failed to prevent them? This is somewhat of a pre-cog/ Minority Report dilemma. I think law makes a reasonable distinction between crimes of commission and crimes of omission. Proving motive and intent are important parts of the judicial process. Madoff intended to defraud. You can prevent a person with malicious intent from causing further damage by imprisoning them. You 'deter' people who commit crimes of omission by keeping them away from whatever they proved incompetent at (debar lawyers, de-license doctors and regulators, fire engineers, etc.)
kenj0418 12y ago
> You know who never goes to jail? Regulators. Nor should they unless they were colluding with him or accepting bribes. The punishment for just being bad at your job should be getting fired, not jail. Of course, I doubt many lost their job either.
- civilian 12y ago
  > The punishment for just being bad at your job should be getting fired, not jail. You should keep that in mind next time you get surgery. :-)
  - kjs3 12y ago
    People dying is not equivalent to people loosing money.
  - temuze 12y ago
    Or building a bridge. Or coding software for medical machines. Or being a pilot or a bus driver. Or construction.
    - schwap 12y ago
      > Or coding software for medical machines. I don't believe anybody was arrested for the Therac-25[1] accidents. [1] https://en.wikipedia.org/wiki/Therac-25 https://en.wikipedia.org/wiki/Therac-25
      - AnimalMuppet 12y ago
        I know of people who have been arrested. They were upper management, though, not engineers. They tried to ignore the FDA, and they got walked out in handcuffs. (This was not in relation to Therac-25.)
  - OvidNaso 12y ago
    You really want the surgeon who is only doing his best due to fear to be operating on you? None of those listed professions at any time motivate their training due to fear of imprisionment. It is a complete non factor and it's only effect is to shovel more pain and tragedy on already tragic situations to the illusion of relief for a small porportion of the parties aggrevied.
neonbat 12y ago
There's no real incentive for regulators to regulate if you think about it. If you DO regulate you're less likely to have exit jobs to Wall Street. If you DON'T regulate and things go well, everything will be good and you'll go through the revolving door to work for big banks and big bucks. If you DON'T regulate and everything goes very badly (you know like a financial meltdown) it's "not your fault."
- rayiner 12y ago
  That doesn't make any sense. The more you regulate, the more banks need in-house regulatory folks and the more opportunities you have to go through the revolving door. Deregulation is not a good thing for people who want to go in-house doing regulatory work.
  - james1071 12y ago
    A friendly, helpful regulator will get job offers to work for the firms he is regulating. A tough regulator will not.
  - neonbat 12y ago
    That's wrong. That kind of regulation comes from the legislature. It's an outside force. The effects of a regulator's actions on their ability to join banks afterwards are measured independently of legislature regulation. What I'm talking about is the people whose job it is to enforce that regulation (the people we call "regulators"). Their incentive is to not enforce it as strongly as they could or should. They "adapt" their policy enforcement to fit what people believe in industry right now, which is why they let all these banks peddle bad loans and commit massive fraud. The reason they "adapt" is contained in my original post.
    - rayiner 12y ago
      Congress only lays out the general contours of the regulatory scheme. It's the regulators that impose the specific requirements and define what they mean.
cylinder 12y ago
Why would someone go to prison for being bad at their job? I don't think you know what a crime is.
- justicezyx 12y ago
  If their job serious have a great deal of importance, then they should be put into jail for being bad at their job.
- Dylan16807 12y ago
  You've heard of criminal negligence, right? Where someone is so outrageously bad that it can only be intentional, with something important at stake that gets hurt.
- mullingitover 12y ago
  With the amount of money in play, the implication is that they were being bribed to look the other way. If nothing else they should get audited down to their grade school allowance to be sure they were merely grossly negligent.
  - Crito 12y ago
    > "If nothing else they should get audited down to their grade school allowance to be sure they were merely grossly negligent." That would not even be sufficient, because for all we know they were bribed with hookers and cocaine. It would not be the first time.
- afarrell 12y ago
  Everyone should read http://lawcomic.net/guide/?p=18 http://lawcomic.net/guide/?p=18
guelo 12y ago
That's a moot point, it's a revolving door between wall street and the regulators. It's the same people.
perfunctory 12y ago
> You know who never goes to jail? Regulators. Clever way to divert a discussion.
superuser2 12y ago
> criminal negligence A regulatory agency that serves a liberal (or at least pro-regulation) administration failing to catch a crook is indeed bad at its job, and yes people should probably get fired. A regulatory agency that serves an anti-regulation administration (and in particular Bush's SEC) failing to catch a crook, is doing exactly what the American people voted for it to do, which is nothing at all. You can't win an election on the platform that someone's job shouldn't exist, he shouldn't have the tools to do it, and we shouldn't be paying his salary, then suddenly turn around and want to throw him in jail for not doing that effectively enough.
- jokoon 12y ago
  I wonder if that's the idea voters have of Reaganomics.
- _yosefk 12y ago
  Weren't Madoff's regulators paid a salary? What tools did they lack to check the warnings they got from numerous sources? Do they not have the right to check which securities the fund actually holds in its bank accounts?
danmaz74 12y ago
> You know who never goes to jail? Regulators. Not true. They go to jail when they're caught getting corrupted by those they should regulate, which unfortunately happens often enough.

by _yosefk 12y ago

Lawtonfogle 12y ago

>You know who never goes to jail? Regulators. Are they paid enough for that increase in risk? I don't know what they make, but other government positions are already underpaid compared to their private sector equivalents. Making them come with a risk of jail time for failing ones job too badly will only result in even less qualified people filling those positions.

tapp 12y ago
I've often thought that we should pay financial regulators competitively with what they could make in the private sector AND in conjunction institute some kind of sweeping moratorium (e.g. you may not take any corresponding job in the private sector for at least 10 years after your government service ends.) I'm sure this would be politically untenable. Headlines would cry about absurd salaries being given to government employees. However I'm equally confident it would save us money in the long run. The current system seems almost designed to create toothless regulators and a revolving door.
- Lawtonfogle 12y ago
  I dare say the majority of government waste and other problems are simply a case of 'you get what you pay for'.

shas3 12y ago

What's the basis for sending regulators to jail? Will you send cops to prison when crimes happen, because they failed to prevent them? This is somewhat of a pre-cog/ Minority Report dilemma. I think law makes a reasonable distinction between crimes of commission and crimes of omission. Proving motive and intent are important parts of the judicial process. Madoff intended to defraud. You can prevent a person with malicious intent from causing further damage by imprisoning them. You 'deter' people who commit crimes of omission by keeping them away from whatever they proved incompetent at (debar lawyers, de-license doctors and regulators, fire engineers, etc.)

kenj0418 12y ago

> You know who never goes to jail? Regulators. Nor should they unless they were colluding with him or accepting bribes. The punishment for just being bad at your job should be getting fired, not jail. Of course, I doubt many lost their job either.

civilian 12y ago
> The punishment for just being bad at your job should be getting fired, not jail. You should keep that in mind next time you get surgery. :-)
- kjs3 12y ago
  People dying is not equivalent to people loosing money.
- temuze 12y ago
  Or building a bridge. Or coding software for medical machines. Or being a pilot or a bus driver. Or construction.
  - schwap 12y ago
    > Or coding software for medical machines. I don't believe anybody was arrested for the Therac-25[1] accidents. [1] https://en.wikipedia.org/wiki/Therac-25 https://en.wikipedia.org/wiki/Therac-25
    - AnimalMuppet 12y ago
      I know of people who have been arrested. They were upper management, though, not engineers. They tried to ignore the FDA, and they got walked out in handcuffs. (This was not in relation to Therac-25.)
- OvidNaso 12y ago
  You really want the surgeon who is only doing his best due to fear to be operating on you? None of those listed professions at any time motivate their training due to fear of imprisionment. It is a complete non factor and it's only effect is to shovel more pain and tragedy on already tragic situations to the illusion of relief for a small porportion of the parties aggrevied.

neonbat 12y ago

There's no real incentive for regulators to regulate if you think about it. If you DO regulate you're less likely to have exit jobs to Wall Street. If you DON'T regulate and things go well, everything will be good and you'll go through the revolving door to work for big banks and big bucks. If you DON'T regulate and everything goes very badly (you know like a financial meltdown) it's "not your fault."

rayiner 12y ago
That doesn't make any sense. The more you regulate, the more banks need in-house regulatory folks and the more opportunities you have to go through the revolving door. Deregulation is not a good thing for people who want to go in-house doing regulatory work.
- james1071 12y ago
  A friendly, helpful regulator will get job offers to work for the firms he is regulating. A tough regulator will not.
- neonbat 12y ago
  That's wrong. That kind of regulation comes from the legislature. It's an outside force. The effects of a regulator's actions on their ability to join banks afterwards are measured independently of legislature regulation. What I'm talking about is the people whose job it is to enforce that regulation (the people we call "regulators"). Their incentive is to not enforce it as strongly as they could or should. They "adapt" their policy enforcement to fit what people believe in industry right now, which is why they let all these banks peddle bad loans and commit massive fraud. The reason they "adapt" is contained in my original post.
  - rayiner 12y ago
    Congress only lays out the general contours of the regulatory scheme. It's the regulators that impose the specific requirements and define what they mean.

cylinder 12y ago

Why would someone go to prison for being bad at their job? I don't think you know what a crime is.

justicezyx 12y ago
If their job serious have a great deal of importance, then they should be put into jail for being bad at their job.
Dylan16807 12y ago
You've heard of criminal negligence, right? Where someone is so outrageously bad that it can only be intentional, with something important at stake that gets hurt.
mullingitover 12y ago
With the amount of money in play, the implication is that they were being bribed to look the other way. If nothing else they should get audited down to their grade school allowance to be sure they were merely grossly negligent.
- Crito 12y ago
  > "If nothing else they should get audited down to their grade school allowance to be sure they were merely grossly negligent." That would not even be sufficient, because for all we know they were bribed with hookers and cocaine. It would not be the first time.
afarrell 12y ago
Everyone should read http://lawcomic.net/guide/?p=18 http://lawcomic.net/guide/?p=18

guelo 12y ago

That's a moot point, it's a revolving door between wall street and the regulators. It's the same people.

perfunctory 12y ago

> You know who never goes to jail? Regulators. Clever way to divert a discussion.

superuser2 12y ago

> criminal negligence A regulatory agency that serves a liberal (or at least pro-regulation) administration failing to catch a crook is indeed bad at its job, and yes people should probably get fired. A regulatory agency that serves an anti-regulation administration (and in particular Bush's SEC) failing to catch a crook, is doing exactly what the American people voted for it to do, which is nothing at all. You can't win an election on the platform that someone's job shouldn't exist, he shouldn't have the tools to do it, and we shouldn't be paying his salary, then suddenly turn around and want to throw him in jail for not doing that effectively enough.

jokoon 12y ago
I wonder if that's the idea voters have of Reaganomics.
_yosefk 12y ago
Weren't Madoff's regulators paid a salary? What tools did they lack to check the warnings they got from numerous sources? Do they not have the right to check which securities the fund actually holds in its bank accounts?

danmaz74 12y ago

> You know who never goes to jail? Regulators. Not true. They go to jail when they're caught getting corrupted by those they should regulate, which unfortunately happens often enough.