Just to clarify,
They were sent to prison for "market manipulation and fraud" which are crimes in many places, not just Iceland.
They weren't sent to prison for being "bad bankers" which isn't a crime in Iceland or anywhere else.
They were sent to prison for "market manipulation and fraud" which are crimes in many places, not just Iceland.
They weren't sent to prison for being "bad bankers" which isn't a crime in Iceland or anywhere else.
This is clearly a dog bites man story about something that happens all over.
Please point to the convictions. We don't throw people in jail because we don't like their business practices.
The idea that the government wasn't absolutely salivating at the opportunity to throw some bankers in jail is one of the funniest things I read on the internet. People don't seem to understand that the government and banking industry are often at odds on many things. Of course, often these are the same people who interpret things like TARP as a "gift" to the banks.
We do when they're fraudulent*
* Exceptions for too big to jail bankers. Jamie Dimon won't see a day in jail despite running a criminal enterprise.
>The idea that the government wasn't absolutely salivating at the opportunity to throw some bankers in jail is one of the funniest things I read on the internet. People don't seem to understand that the government and banking industry are often at odds on many things.
The banking industry has a meltdown when the government isn't treating them with utter admiration.
If the DoJ were actually concerned about putting bankers behind bars they could easily use Sarbanes-Oxley to make a few bank CEOs do the perp walk in an orange jumpsuit.
They're far too rich a source of campaign contributions, however (see Hillary's Goldman Sachs speaking fees for instance).
[0] https://projects.propublica.org/bailout/
[1] http://www.nytimes.com/2014/12/20/business/us-signals-end-of...
All of the chronic systemic problems that led to the "crisis" conditions in 2008 have only gotten worse since the bailouts. By that measure, they were not the best public actions that could have been taken, for the public. For Hank Paulson and his cronies, they certainly were the best public actions that could have been taken.
Instead of a simple bond, they could have offered an alternative instrument that ensured less of a .. cavalier.. attitude towards trading. "These bonds are issued contingent upon .. {loans must be underwritten by X% in fungible assets, rather than ISDA 3rd-order derivatives (ugh bad pun); Y% of your profits for the next Z years must be invested in a FDIC-esque safety fund as insurance for the next crash; or hell, 'the US government will offer $foo MM in exchange for $bar equity, the profits of which will go towards this years deficit/national debt/...'. If you read first-party accounts at the time when Mae/Mac/Stearns and AIG when down, absolutely everyone was so panicked the board members/CEOs would have taken those terms.
Yes, convicting these people would have been difficult (which speaks to the alleged crimes, in my opinion). Yes, the bank bailouts weren't a paragon of good sense. Hopefully lessons will be learned for the next time.
Perfectly valid arguments and far removed from "toss these chaps in prison". I don't want to live in that world.
It's a free market: you make mistakes, you lose.
Precisely, if you invest money, you should be prepared to lose that money. Now we're in a situation where if the amount you lose is large enough, no worries, the tax payers will refund your investment. It was a large amount you lost after all.
Here, in Denmark, we now have "systemic banks" aka "to big to fail", just like in the US. Not once have I hear someone suggest that MAYBE just fucking maybe, the issue is that the banks are to large. But no no, we'll have non of that. In fact let's make it an issue that to many people pick smaller, less well consolidated banks. How can a government not recognize that it's a problem if a country will be thrown in to chaos (apparently) should this private company fail.
Smart people have said it. Here's Paul Volcker saying, "Any bank that is too big to fail is too big to exist." They should be broken up: http://www.wsj.com/articles/SB100014240527487048255045745863...
Sheila Bair, the head of FDIC was also talking about breaking up banks that were too big.
But you know, there were lobbyists, and also the regulators who want to regulate large things. Eventually it will happen, after the next crisis, or the one after that, because, as Volcker says, "it just makes sense."
You can argue that we shouldn't have interfered in the free market like that, and in fact I agree in principle, but the "rawr, my tax money" argument doesn't hold water.
It's not like those banks were protected with no external consequences. What would have been an industry wide boon to mid and small cap banks instead turned into the ugliest type of market intervention conceivable. The only reason those tax dollars were paid back with interest is because no one can compete with the 800 pound gorilla who when he falls out of the tree because he got drunk on his own power, the government picks him back up and places him back on top.
>Those investments later paid back very good returns.
When you spend 20 years convincing people that the right place to put their retirement nest egg is in mutual funds and stocks and that defined benefit pensions are not economically viable and that gov't run social security should be capped or cut...
Well big surprise you now have a huge constituency demanding that 'the stock market' be bailed out.
[1] http://uk.reuters.com/article/uk-iceland-crisis-idUKBRE8BR0E...