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Comment by maeon3 | Hacker News Reader

The people who should suffer and eat this loss are the people responsible for letting it happen. Sadly, this will not happen, and the loss will be socialized (and profits capitalized) across the entire people through the form of raised insurance rate policies.

It's the system of insurance that is broken, not the fact that dumb corporations are doing stupid things and losing other people's money.

Socialism doesn't work in any system that you implement it in. When you separate the consequences from the actor, the rational actors will behave in a maximally self-interested way and screw everyone else. When all do this, the nation falls back 100 years. Not remedied, the nation falls back 1000 years.

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Huh? So you want the head of security at the hacked bank to pay for the losses personally?

He means the bank should take responsibility and chalk up the stolen cash as their loss. What's more likely to happen though is that the bank will pass the cost of the loss on to customers (in the form of increased prices).

Well of course they're going to raise prices. They're a business. This isn't happy fairy land; their cost of doing business went up, so their prices will have to go up. If businesses didn't increase their prices to match an increase in cost of goods sold, they'd quickly go out of business.

NO. This is where you're wrong. This is a business; their goal is to get money: ALL the money, at all times. If they could raise prices and make more money, they would have done it already. They're not sitting on their laurels saying "We have enough money!" only to be shaken from complacency and driven to change their price schedule because of an unexpected expense.

This money comes straight out of their value as a business. It is a loss to the shareholders.

Wouldn't that necessarily force them to raise prices or cut payments or leave them with less money to lend? I mean, it has to come from somewhere, right?

Yeah, the money has to come from somewhere. But the point is, the loss could've been mitigated by making better decisions. The bank has less incentive to change their behaviour when the customer will ultimately cover the cost of their mistake.

Say for example there was a regulation that said banks couldn't increase fees because of theft (as a thought exercise, not a practical suggestion). The 45 million loss would directly affect their profits. Lets pretend this happened on a yearly basis on average, it makes good business sense to spend 20 million a year on security to prevent it happening.

If they can lose 45 million a year but know they can recuperate 30 million by making the customer cover the cost of losses, it becomes cheaper to charge the customer than invest in security.

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