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Comment by tokyodude | Hacker News Reader

I haven't a clue about the whether the bailouts were important or not. What I feel like I would have liked is for the bailouts to happen AND the top 20 to 100 people from every financial institution to have gone to prison for at least 10 years. The president of Goldman Sachs, the president (or ex-President) of Lehman, etc... etc...

What it seems like from the outside is they screwed the world over and completely got away with it on our dime.

I don't know if my impression is right or what would convince me the fact that there seemed to be no repercussions for their actions is somehow the right thing. Just saying that's how it seems.

I don't believe for a second those people were irreplaceable as some have suggested. People are replaced at giant companies all the time and the companies keep on functioning. If we need one example Steve Jobs death certainly shows that. Could pick any other CEO that left or was shoved out or past away.

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Is it their failure you believe they should be jailed for or something else?

Do you believe that the CEO of any company that fails should be jailed or just banks?

There was undoubtedly plenty of hubris, greed and incompetence to go round. I also believe that some of what occurred should, in hindsight, have been illegal. But having some sort of sacrifice to appease the gods is a little outdated.

Oh, and yes, all the CEOs were replaceable. Irreplaceability is a very silly argument.

The companies didn't just "fail", which implies accident or even incompetence but not malice. What happened was that the elite of the financial services industry arranged a nice little cash cow for themselves, enabling them personally to live lavish lifestyles, knowing perfectly well the consequences in the end (which, for them, due to their complicity with the regulators and governments, were none).

As to CEOs being irreplaceable sure, but they're also very focused on not going to jail. Personal liability for top execs which might actually result in jail time is a powerful incentive for those execs to ensure their companies don't engage in that kind of behaviour.

No. It's an incentive to change the corporate structure.

Sorry, but it's simply not that simple.

> I also believe that some of what occurred should, in hindsight, have been illegal.

That is the main issue. Nothing you can do against individuals that acted legally.

However hindsight happened very quickly, almost from day 1. There is no excuse that the bailouts didn't come with extremely punitive string attached only loosened after the law had been updated.

That did not happen. There is no moral to the story, no happy ending. Worse, hindsight works both ways. Maybe the current generation of financial company executives have learned their lesson, but the next one will have no such reserve.

>That is the main issue. Nothing you can do against individuals that acted legally.

We can punish them for actions deemed wrong even if legal. We do it to the poorest of criminals all the time, through creative legal maneuvers that judges have decided don't violate ex post facto. It is telling that we never do this for white collar crime.

It was not failure. It was at the very least gross negligence, if not outright theft and fraud.

Civil society decided that retroactive application of laws is a very bad idea.

So prevention is the name of the game. But that requires competent regulators and oversight. Compliance and reporting laws, and so on. Investigators with staff and time, prosecutors willing to chase a case, and of course independent judges.

The SEC and DoJ could have tried to bring more charges, and they got billions in deferred prosecution agreements, maybe not enough though. (They - I mean DPAs - are not shiny like a jail time verdict, but they do work pretty well https://www.justice.gov/opa/pr/soci-t-g-n-rale-sa-agrees-pay... see also https://scholarship.law.unc.edu/cgi/viewcontent.cgi?httpsred... )

If we want to make up for the money lost by the innocent, then we can chose to tax those we think benefited. But that's completely different than blind vengeance.

It would not have to be retroactive. I don't believe that there weren't existing laws violated that could have been pursued. For instance, there's a documentary called "Small Enough To Jail" about Abacus bank - a small family run bank that was the only one to be prosecuted for mortgage fraud due to NINJA loans, although practically every bank was doing this at the time. That's just one example.

>Do you believe that the CEO of any company that fails should be jailed or just banks?

Watch Silicon Valley scramble to adjust their moral compass if Tesla fails in the same manner.

"Do you believe that the CEO of any company that fails should be jailed or just banks?"

At a minimum they should have lost all their money and not walk away with hundreds of millions of dollars.

No new laws are needed. The credit ratings agencies fraudulently mislabeled loans. This was criminal behavior and was not prosecuted.

https://en.wikipedia.org/wiki/Credit_rating_agencies_and_the...

Regardless of whether that's true, the posters above were talking about employees of investment banks, which are not the same thing as credit rating agencies.

Perjury then?

https://www.businessinsider.com/goldman-sachs-lied-2011-5

Sending people to prison involves prosecuting people for breaking laws somehow, which isn’t easy. You can’t just send them to jail on a whim. Even if what they did was wrong, unless there was a law against it the government didn’t really have many options here. They could make up some laws after the fact to prevent future abuse, but cannot make them retroactive.

Even if you subscribe to the idea that there weren't correct laws in place to ensure that those who should have been criminally responsible, you then have to contend with the the corollary. Which is that instead of prosecuting those responsible, legislation should have been brought forward so that this couldn't happen legally in the future. That didn't even begin to happen- and it's not difficult to see how that has fundamentally poisoned the well in the US.

> legislation should have been brought forward so that this couldn't happen legally in the future

What couldn't happen legally?

A repeat of 2008. The idea being that there wasn't sufficient laws in protections in place to prevent this sort of thing from happening again, or that people most directly involved can't just skate.

Problem is though, even if laws were passed, once 2008 fades far enough into the past you'll get someone with a really bright idea, "Hey there's too much regulation stifling our economy. If we just got rid of all those pesky laws the free market would create a utopia!" Because every tom, dick and harry wants their chance to repeat history after the last tom, dick and harry have died.

I’m all for that, and some new civil laws were introduced. Trump is busy trying to undo them ATM, but there we go. The problem criminal laws, however, is that they should be really well defined without being overly restricting. Being greedy can’t be made a crime; it has to be fraud, racketeering, or something obvious.

I think it's fairly safe to say, the conspiracy that created the collapse amounted to financial terrorism, and then (to fix things) extortion.
We have the laws. What we lack if the will and the power to apply them.

Economist had calculated a significant number of deaths (worldwide) resulted from the 2007 / 2008 crisis. I believe the number was approx 30,000 (but it may be higher).

Editorial: If we don't have laws for such things then the elected should be shackled for their neglect and failure.

Financial terrorism isn’t even defined as a crime. It would have to racketeering or something, not easy things to prove even in gang/mob cases.

Legislative neglect also isn’t a crime that lawmakers can be prosecuted under. You can, however, not vote for them during their reelection campaign. You can also vote for lawmakers that would bother to push for such laws.

For better or worse, western countries are generally strong rule of law ones. If this was a country like China that practiced rule by law instead, I’m sure they could find something to throw them in jail on, but it isn’t.

Perhaps. Not being snarky but how do you establish precedent if you don't try? In the context of justice, I find it troubling the (US) gov made no effort.

You can’t just go up to a grand jury and say: we don’t know what we can get them for, but I’m sure we will find something along the way.

What does “effort” mean here? Even an investigation requires some kind of suspicion of foul play. They can’t just investigate someone because they are out to get them (well, at least they shouldn’t).

> how do you establish precedent if you don't try

It's unclear whether you know what "precedent" means in a legal context.

Manslaughter as a result of gross criminal negligence.

Could have prosecuted and imprisoned for perjury dozens if not hundreds hundreds of people offering false affidavits claiming personal knowledge of loans they knew nothing about in support of foreclosures.

You could have prosecuted and imprisoned all of MERS's officers for racketeering.

The first happened in teensy numbers, the second, not at all.

(copyedited)

What crime did each of those executives commit? That’s what needs to be answered. Otherwise your comment reads like a mob chanting “We want blood!”

Being greedy is not a crime. Taking advantage of lax regulations is not a crime. Being bailed out with tax dollars for risks that paid you off privately if they won is not a crime.

> Being greedy is not a crime. Taking advantage of lax regulations is not a crime. Being bailed out with tax dollars for risks that paid you off privately if they won is not a crime.

Maybe that's your point, but therein lies the problem. Doing all these things has an upside but no downside, therefore we're encouraging antisocial behaviour.

Some would probably settle for blood.

However, plenty of others aren't interested in that. What they seek is simply what we are told the republic promises us and the rest of the world.

That is, justice.

Instead, per the article, there was no justice and no closure. __And__ the voice(s) of the mob(s) - in the absence of justice - are raising louder and louder. The impact from 2008 is far from over.

I see this sentiment fairly regularly on HN. It's the idea that laws can sufficiently encapsulate ethical behavior (the rules) when they're strictly enforced, that they're the best thing we got, so live with it.

But there are many behaviors which aren't "crimes" but which are morally repulsive.

The danger of not reacting, one way or another, to such inequities is that people lose faith in the system. Already, the election of Trump and rise of fascist sentiments everywhere are like a giant "fuck you" to politics as usual.

It can get much worse. At some point, as one billionaire said, "the pitchforks are coming". I don't think we'll be able to avoid it the way things are going.

> I see this sentiment fairly regularly on HN. It's the idea that laws can sufficiently encapsulate ethical behavior (the rules) when they're strictly enforced, that they're the best thing we got, so live with it.

> But there are many behaviors which aren't "crimes" but which are morally repulsive.

I don't agree with that concept. I don't think it's possible to legislate morality and the entire concept is downright scary. What's even more scary though is metering out justice based on perceived morality. Justice needs to be impartial, otherwise you're literally putting people in jail because your dislike them.

> The danger of not reacting, one way or another, to such inequities is that people lose faith in the system. Already, the election of Trump and rise of fascist sentiments everywhere are like a giant "fuck you" to politics as usual.

On the contrary, I see the election of Trump as a demonstration of people's faith in the system. It worked as intended and they got what they (electorally speaking) asked for.

> It can get much worse. At some point, as one billionaire said, "the pitchforks are coming". I don't think we'll be able to avoid it the way things are going.

I really doubt that. I've got significantly more faith in our shared humanity and the rule of law. I do find it disturbing how a lot of the politics on the left has shifted from policy disagreement to directly stoking violence. But it'll eventually pass.

Unemployment and immigration policy is at a tipping point where the only choice for employers is going to be rising wages. The left is going to have a hard time arguing that's a bad thing.

> The left is going to have a hard time arguing [rising wages are] a bad thing.

Why would the left argue that rising wages is a bad thing anyway? It seems that a significant subset of the left has been beating the “we need higher minimum wages and more wage growth overall" drum for a while.

Is it just because they strictly prefer a governmental rather than a natural market solution? Or something else?

I believe that koolba's point was about rising wages in relation to immigration policy. That is, wages rise further if we let fewer immigrants in. But that's a problem for the left, which wants rising wages, but also wants a liberal immigration policy.

> I don't think it's possible to legislate morality and the entire concept is downright scary.

What are laws if they are not an attempt to codify and enforce a group morality?

     > I don't agree with that concept. I don't think it's possible to legislate morality...

We don't have to "legislate" the morality but we do have a responsibility for doing _something_. "Rule of law" means nothing if one class of people has subverted the law, enforcement and governance to their benefit at the expense of everyone else.

> We don't have to "legislate" the morality but we do have a responsibility for doing _something_.

If the government, or specifically the justice system, is going to be involved in that "_something_" then we need laws that can be enforced by prosecutors and interpreted by judges. If you want that to include actions that is currently legal but which you find morally reprehensible (ex: the actions of these finance executives) then that needs to be codified in law before you can go after them. And that's literally legislating morality.

> "Rule of law" means nothing if one class of people has subverted the law, enforcement and governance to their benefit at the expense of everyone else.

They haven't subverted anything. They've taken advantage of a system that is available to them. Ditto for veterans who get subsidized school or home loans, Tesla drivers who get $7,500 in EV credits, small business owners who get SBA loans, or anyone else that takes a dime from the pool of money we call public spending. You could argue that anyone of those programs is to the benefit of only the receiver and the detriment of the rest of us[1].

And there's already a system in place to change it. Elect politicians that will make the changes you want and understand the positions of the ones that are currently in power.

With all the demonizing of wall street in regards to the 2008 crisis, most fail to go back to the true cause of the crisis, i.e. the repeal of the Glass-Stegall Act[2] via the Gramm-Leach-Bliley Act[3] signed by President Clinton in 1999. It took almost a decade but the entire "too big to fail" concept grew from that repeal.

[1]: I generally don't like qualifying my statements but for clarity, I'm saying you could argue it. I'm not saying that I would necessarily argue against those (well except the EV one which is asinine...).

[2]: https://en.wikipedia.org/wiki/Glass_steagall

[3]: https://en.wikipedia.org/wiki/Gramm%E2%80%93Leach%E2%80%93Bl...

> With all the demonizing of wall street in regards to the 2008 crisis, most fail to go back to the true cause of the crisis, i.e. the repeal of the Glass-Stegall Act[2] via the Gramm-Leach-Bliley Act[3] signed by President Clinton in 1999. It took almost a decade but the entire "too big to fail" concept grew from that repeal.

As pointed out elsewhere, the repeal of Glass-Stegall was not the problem. Not only do most other countries not even have an equivalent law, but the crisis was triggered when a standalone investment bank failed.

It didn't cause the root problem but it contributed greatly to it ballooning beyond a handful of investment banks to main street ones.

Interestingly it was also involved in the solution as it allowed some of the mergers that softened the collapse.

The crime was massive fraud by the credit rating agencies:

https://en.wikipedia.org/wiki/Credit_rating_agencies_and_the...

As I commented elsewhere credit rating agencies are not the same things as banks. Why should bank executives be prosecuted for something credit rating agencies did?

Dick Fuld significantly misrepresented the actual financial health and leverage of Lehman on public financial documents. Pretty clear Sarbox infraction. Nothing happened to him.

At the very least the WS power structure should have been redistributed. Prior to the crisis there were eight major WS "banks." After there were seven. We were told by many elected officials that less was not a positive for the rest of us. Ten years later, after eight years of a "liberal" POTUS, there's still seven.

Editorial: In the context of such history, DJT is the least of my worries.

>after eight years of a "liberal" POTUS

6 of those 8 years fighting a conservative Congress in both houses. Only 4 months of those other 2 years did he have enough Senate votes to bypass conservative filibusters. He spent that time/capital/effort squeezing ACA through.

My understanding is the Obama DOJ was "guided" to turn their backs on any prosecution of WS and WS execs.

The bottomline, zero effort was put into it. None. Given the magnitude that's not acceptable. I'm pretty sure DJT sent BHO a thank you card.

What would all those executives go to prison for?

Did those people do anything wrong or were they just essentially incompetent or not adequate for the job? Bonus clawbacks after government bailout are one thing but jailing people who probably didn't do anything criminal is a dangerous precedent.

There exists the concept of criminal negligence. I would say being in the wrong and being incompetent are not mutually exclusive.

If they are incompetent and they have consciously taken the positions they hold - then they are liable. Finance isn't "revolutionary" tech - there isn't much you can do that requires high risks and actually rewards you in the long run.

I would wonder what you'd say about a general who didn't know that using chemical warfare is a possible tribunal scenario.

We have a similar legal case in maritime law, where captains can be sued for anything that happens on their ships. If you can't take on that role and it's liability - then you shouldn't be the captain.

> Finance isn't "revolutionary" tech - there isn't much you can do that requires high risks and actually rewards you in the long run.

I don't think you read the article because it is based on a 700 page book about how it was revolutionary tech. It was just revolutionary finance tech. There was no ABCP before, there were no CDOs before, there were no central bank swaps before, there was no wholesale funding market, there were no offshore dollar banking market, etc.

It is hard to take seriously any arguments that the bankers were incompetent when you look at the sheer number of affected institutions -- you're left defending a claim that virtually every banker and most companies (look at the impacts on, say, Russian resource companies when they could no longer roll their dollar debt in wholesale funding markets in 2008) are incompetent. And that's always going to be difficult argument to make.

All of those "technologies" you mentioned are schemes for a small elite to accumulate wealth.

>> you're left defending a claim that virtually every banker and most companies

I don't need to defend that claim: most companies didn't care and neither they had enough resources to do their own, full due diligence into the state of America at the point of time. That's the job of the banks.

The fact that Russian companies held their debt in dollars has nothing to do with CDOs but rather their (false) belief in the stability of American economy.

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