Comment by ativzzz | Hacker News Reader

Comment by ativzzz | Hacker News Reader

Large companies will continue doing illegal things while reward outweighs the risk. This reminds me of pharmacy distributors that contributed to the opioid epidemic. They continue operating even when they were told not because there was no real punishment in place, and the only thing that stopped them eventually was a criminal indictment [1].

Fines do not work, because like the OP article states, the shareholders end up paying up, not the executives who let these things happen. If we want to curb this behavior, we need to do one of 4 things:

1. Criminal indictments for executives and/or the company instead of fines for breaking the law

2. Fine executives severely, to the point of bankrupcy, on top of fining the company

3. Significantly increase the fines against the company, maybe a magnitude of 100-1000x, to the point where breaking the law flagrantly may result in bankruptcy or dissolution of the company. A fine should not just be "cost of doing business"

4. Prevent the company from doing business in an area where they broke the law. E.g - if they launder money illegally for a Ukranian businessman, forbid them from doing any business in Ukraine for several years. This one is more nebulous and may not work effectively for banks. Worked for shutting down opioid distribution for certain localities[2].

[1] https://www.npr.org/2019/04/23/716571375/drug-distributor-an...

[2]https://www.pharmacytimes.com/news/oxycodone-supplier-shut-d...

You advocate terrible policy.

Someone sets up a bank to serve their community, taking investors from all over your area. They take deposits, make loans to help the community grow. The management team is great at training staff to follow all banking regulations. The bank grows to hundreds of branches.

Then one branch manager is bribed by a criminal to subvert banking regs and the internal control systems, so they can launder millions of dollars.

You would prosecute the CEO for unknowingly employing a criminal? Or senior execs for unknowingly having security holes a clever employee could buy pass (when all control systems can be bypassed by clever employees)? You’d increase fines to bankrupt the Company and wipe out investors investment fir the crime of hiring an honest CEO and execs who got fooled by one bad Apple?

Intent matters.

Yes absolutely.

A one off situation like you describe can be limited to punishing the particular branch manager. However, banks like Deustche and JPMorgan, who seem to be having these issues nonstop with regularity, are clearly run to allow these kinds of criminals to actively participate in their banking structure with minimal oversight, hence the responsibility resting on the higher-ups.

Again no monitoring system is perfect or unbreakable. Large banks are going to seem more like they “allow” this simply because they have 10x-100x more employees.

The solution to people laundering funds from selling marijuana isn’t punitive banking regulation, its legalizing marijuana. The solution to Dictators stealing from their citizens isn’t onerous banking regs on the 99.9% of honest clients, it’s removing Dictators from power.

> removing Dictators from power

One way to remove dictators from power is to disrupt their money flows, so tighter banking regulations to prevent fraud and money laundering.

> simply because they have 10x-100x more employees

There are plenty of large banks who do not have this issue. Considering Deustche on its own has had more sketchy money than pretty much all other banks combined (according to the article) speaks volumes.

Please name a single dictator removed from power using banking regulations.

Then explain why the banking system is used against Dictators who still have voting rights in the UN.

Maybe if we had better systems in place to prevent fraud and laundering, we could do better. Banking regulations are preferrable to the other means we have of removing dictators from power: war, old age, violent revolutions.

You just said not removing dictators is preferable to removing them, since all financial regulations can be evaded by dictators. You can’t name a single dictator brought down by financial regulations.

And bloody war and revolution is preferable to inaction, because every day is bloody under tyranny. Averting your eyes doesn’t stop tyrants from killing and oppressing their people.

How do you remove a dictator from power without invading that country?

Imagine managing a nuclear facility.

One of your employee is bribed to open the valves and a whole region is flooded in nuclear waste.

Would you argue that the higher up managing that facility have nothing to be blamed for, because it was just a rogue employee’s issue ? What are they even managing, if they can’t make sure to have an healthy and working organization ?

How often do you ride your straw horse?

No one is saying management has no responsibility. It’s saying they should be judged on whether they put reasonable controls in and used reasonable efforts to ensure they are followed.

The point is on “reasonable”.

We are so far away from any reasonable efforts that we’d need to put pretty drastic punishments to even have a chance to tip the balance on the “too much” side.

In particular in the current situation we are talking about rampant criminal behavior, it seems weird to me to go “don’t tap too hard on their fingers, they are doing all their best, sending memos every quarter to absolutely not make money though unethical ways”

What “rampant” criminal behavior?

Do you currently see banks as a bastion of straightness and uncorrupted values ?

We have scandals after scandals for as long as I can remember, from the pettiest levels (opening sub accounts without telling clients to meet sales figures, blacklisting bankers from the whole profession when they dare refusing to play along) to nation wide crisis inducing levels.

The point of this article should be that SARS are filed often for things that aren’t criminal, mostly for things that aren’t criminal. So where is all that crime?

Again, the only specific crime you’ve listed is the Wells Fargo commission scam committed by mid level employees to up their compensation. They didn’t steal anything or kill anyone, they created some extra accounts to look good in review.

Well, the CEO get’s paid life-changing money for that position, sure there should be some life-changing liability

Would you take a job paying $10M a year if you will spend the rest of your life in prison if a single one of your ten thousand employees commits a felony?

Then maybe we should check whether the existence of entities capable of paying such amounts tot the executive is a sustainable way to have a business?

This sort of regulatory response has already caused a problem: as a 100% legitimate business, you can already get totally cut off from all banking services if something about you feels potentially dangerous to back-office staff isolated from anyone you can talk to.

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