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Comment by rdtsc | Hacker News Reader

$5B - not pocket change, but operating on $40B revenue not exactly too damaging either.

Its stock hasn't nose dived. Nobody is going to jail. Investors think they are ok. This is just business as usual.

They have 0 incentives not to do it again. In fact they'd be stupid not to do it again. Given they know better how fines are calculated and can just fold that into the total equation.

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The prize for the DOJ in this settlement was an admission of wrongdoing. Theoretically this opens Goldman Sachs up to a lot more lawsuits and damages from private investors that were screwed when Goldman Sachs knowingly sold them mortgage bundles that were doomed to fail.

That said, I'm really surprised the stock hasn't taken more of a hit from this case.

> I'm really surprised the stock hasn't taken more of a hit from this case.

Already priced in long ago. Agreement in principle was made in January.

http://www.goldmansachs.com/media-relations/press-releases/c...

Reserves for these penalties were allocated last year.

Yeah, and stock actually moved up in the short term when this was first announced since a settlement was reached.

http://www.nytimes.com/2016/01/15/business/dealbook/goldman-...

TLDR: Other wall street bank settlements were much greater.

I wish it was common in more than just banking.

yes let a million lawsuits rain!

Actually, it looks like they'll be able to discharge about $2.7B as "expenses". So effectively they'll only be paying around ~$2.3B for completely destroying the American economy. I call that a bargain.

Goldman Sachs completely destroyed the American economy?

Not single-handedly, by any means.

Or at all, observationally.

Oh no. There's a lot of ruin (™ Adam Smith) in the US and global economies, but a great deal of damage has been and is being done and more is to come.

You are right, we are so much better off by having bailed them out. We should do more of that.

"Better off" is impossible to judge. Your anger is causing you to use phrasing that isn't terribly productive in conversation.

Speculating on how a stranger's emotional state influenced their stated opinion, based only on their internet posts, is impossible to judge and that isn't terribly productive in conversation.

Trolling people's word choice and similar is a game better played at Slashdot.

Yes. The economy you see now is wholly new and remarkably created by Al Gore.

Let me rephrase it: "Goldman Sacks took a central role in creating a crisis that, hadn't it been resolved by investing hundreds of billions of taxpayer dollars, would've tanked the global economy; it also made sure to be on the negotiating table from day 1, so that its interests took precedence over those of other companies (Bearn Sterns, Lehman Brothers) and the American public."

So yeah, they might have not taken down the economy, but fuck me they got a sweet deal for being criminally irresponsible.

> hadn't it been resolved by investing hundreds of billions of taxpayer dollars, would've tanked the global economy

First off, it was trillions AFAIK.

Secondly, the impact of the bailout on the global economy is still playing out:

http://www.tradingeconomics.com/united-states/money-supply-m...

While I'm agreeing with you, I'd go further to say that the impact of socializing the fraudulent losses of these firms simply has yet to be felt.

I was trying to qualify my statement as much as possible so I wouldn't get accused of using hyperbole for effect. But yes, what you said.

If the settlement is not greater than the gain of the fraud, it looks more like a cost of doing business than a penalty.

What is the gain from the fraud? Note that in the comments section of HN, it's acceptable to compare the settlement to the entirety of a company's revenue. In court, the fine would be compared to actual damages, which requires a causal connection between misrepresentations and losses. You might be able to establish damages in a statistical fashion, but that will still come down to computing some specific fraction of the sales that were fraudulent and the fraction of the value of those sales that were losses.

Very difficult to establish the gain, because some of that gain requires estimating the counter-factual profits they would have made in various circumstances.

They could just confiscate the fees charged on the transactions in question, surely that has been recorded.

That would be just part of the upside. It's like a gambler betting $10 on 1:8 odds if the real odds are 1:7. It's hard to measure the profits of being a good gambler.

for small fish, the law say that you must first return any gain, and then pay the fine plus damages.

One gain is that they're still a going concern and none of the individuals responsible have faced any sanctions or penalties.

You'd think at least that these folks would be barred from any further involvement with the financial industry.

Yep you just bake it into the model. Also it won't actually end up being 5 billion:

http://www.nytimes.com/2016/04/12/business/dealbook/goldman-...

It's already being done again, just under a different name. It started again as soon as the bailout checks cleared.

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