It's a good comparison. Engineers can be personally liable if they are negligent in their jobs. Why not bankers?
If we can do it for compliance officers, why not for CEOs? The average citizen is more likely to be harmed by financial collapse than a terrorist.
CEOs are hired to be the public face of the company. The board who hires the CEO doesn't want the face of their company being a criminal, and in the U.S. corporate boards overwhelmingly dictate the law books. That's how capitalism works.
I don't think that's capitalism, I think that's corruption, which may be a big part of this implementation of capitalism, but I feel like it is separate.
I feel it’s inappropriate to use the already really strict requirements bankers face as a justification to expand government control to other industries.
I’m not talking about common sense rules like liquidity requirements. I mean things like extremely invasive “know your customer rules” and holding compliance officers personally liable.
Imagine the field of engineering in a world where science still debated whether the world was flat or round, or whether empiricism was even worth the trouble in physical sciences (and if you felt strongly one way or another you were considered an ideologue) -- that's where economics is today.
In SVB's case, the risk was not in the bonds themselves, but in the facts that a) there was a yawning mismatch between the high interest they needed to pay out on deposits to stay competitive and the low interest they were getting on their locked-in capital, and b) their customers were heavily concentrated in a single industry, namely fickle VCs and their companies.
Problem is that I'm not sure wether to blame the fed or the banks.
This was 100% SVB fault and 0% Fed fault.
Economics just isn't as well grounded, so Banking is always going to be less certain - and perhaps, for that reason, should be far more conservative.
Politicians are mostly professional parasites and most political systems seem to attract, apart from the odd once-in-a-while genuine idealist, exactly that type of people.
I find it very hard to imagine that there is a lack of honest grass-roots idealists in a country of 350+ million people, so it must be a lack of people willing to vote for them.
https://www.cnbc.com/2017/08/26/vw-engineer-sentenced-to-40-...
And if a product fails in a significant way, you'd need to either revoke the engineer's license, or impose even more serious punishments.
Without appropriate legal structures, the best you can do is say, "No, that's a dangerous idea and I won't do it. You'd have to fire me first." Which I strongly encourage saying when appropriate. But it's not the same as a regulated industry with written best practices.
In the absence of more specific regulations, it's usually difficult to "pierce the corporate veil". The corporation itself has liability. The shareholders have limited liability. And sometimes corporate officers have personal liability for certain things.
At the same time, I don't think it makes sense to punish a junior programmer for writing buggy software. It's the corporation that should be creating processes which detect and prevent bugs.
I think rigorous building standards for certain components of software is possible, and I think we should do it, eg payments. But unlike building, I don't think all software should need to follow standards.
For example, losing one's net worth might be an example. Shareholders are already subject to it, while for employees, even when fired, they just lose the potential of future earnings, leaving their accumulated net worth untouched.
Wikipedia calls this the principal-agent problem ( https://en.wikipedia.org/wiki/Principal%E2%80%93agent_proble... ). Should employees in a position of power be agents that are putting up some collateral as a guarantee to be forfeit in case things go south? Or otherwise would unwarranted risk-taking behavior in their job be enough to go to jail when the results of their actions impact others in the world at large negatively?
It seems engineers screw up on purpose often enough that the monetary incentives must be there.
Should we hold developers at uber criminally liable if the company fails? management? where does it stop?
Apparently not even if they design a system for thwarting regulators from doing their job.
I don't see the issue: that is part of being an Engineer: lives and livelihood of people depend on your work "working." That is how it works in all Engineering fields. Somehow in software engineering we give the title and forget the responsibility.
On the other hand, in a lot of jobs, engineers are overruled and treated as monkey typists, so...
Example: At Boeing, Engineers were overruled on 737 Max, and passengers paid the price. Time someone pays for that, in this case FAA included.
tl;dr: "Somewhere between the janitor and the CEO, reasons stop mattering," # Steve Jobs (note: Rubicon is VP for him)
(See https://www.businessinsider.com/steve-jobs-on-the-difference....)
[Edit: P.S. Some of us gave a professional oath and take it pretty seriously. We should not hold our peers to lower standards.]
It's sort of the same as the question of whether soldiers should be held responsible for wars. There wouldn't be any wars if they all refused to fight. On the other hand, they are just carrying out orders. On a third hand, why the hell is "just carrying out orders" a good excuse for killing people? Why would anyone just "carry out the orders" without thinking about it themselves? Why should we be able to outsource our ethics? These are all questions that anarchists (the serious, intellectual variety), like to ask.
Considering the forum, it’s important to raise this distinction I think due to the lack of ethics and uniform professional standards in software.
The question remains…
Should a board of directors and other senior leaders be liable for software harms (eg. Breaches) caused by poor oversight, malfeasance or greed?
I feel like the term "normal" here is a bit loaded.
To quote Buffett on First Republic Bank[1]:
>> If you take First Republic, for example, you could look at their 10-K and you could see that they were offering non-government-guaranteed mortgages in jumbo amounts at fixed rates, sometimes for 10 years, before they changed to floating. That's a crazy proposition.
Rubbing salt into the solvency wound, an overwhelming majority of First Republic's long-term assets were tax-exempt municipal bonds, and thus not eligible BTFP[2] collateral.
In the case of SVB, it was an extreme outlier with respect to sector concentration of uninsured depositors where all it took was a single individual with influence in a tight-knit community to trigger historically unprecidented outflows, which in turn forced massive losses in long-dated securities to be realized in an attempt to quench the liquidity demand impulse, which in turn broke the bank's solvency...nevermind that their outsized duration risk wasn't hedged, or that their Chief Risk Officer stepped down almost a year before the bank's demise without proper regulatory disclosure.
Then there's the matter of certain relaxations to the Dodd-Frank Act pushed during the Trump administration[3; see Title IV]...nevermind that Frank himself sat on the board of Signature Bank, or that SVB's CEO Becker sat on the board of the San Francisco Fed. I suspect it's not merely a coincidence that the assets of these failed banks skyrocketed shortly after deregulation yet remained under a certain $250 billion asset threshold "for strategic reasons".
[1] https://youtu.be/5QBkn42PSxk?t=488
[2] https://www.federalreserve.gov/financial-stability/bank-term...
[3] https://www.congress.gov/bill/115th-congress/senate-bill/215...
I think it would be good for the field if this was a possibility, but as far as I know it this is only really possible for the classical “get a license or operate under an industrial exception” type engineers.