Eric Holder: People don't commit crimes, corporate culture commits crimes

[Otsog]

http://www.rollingstone.com/politics/news/the-9-billion-witness-20141106?page=6

 

Long, but rly good. 

 

tl;dr Holder bends over backwards to keep bank employees out of jail

 

 

I wonder if it wouldn't have been better for shareholders if the DOJ had gone after criminal prosecutions instead of civil settlements.  I don't think Main Street/Occupy cares as much about the fines and they would have been far more sated with people who committed fraud going to jail.  White collar crimes being as hard as they are to get a conviction, only the most blatant and deserving fraud would get caught, which as a shareholder you would want out of the bank anyway.  Or may criminal convictions would have exposed the banks to more liability, idk. 

 

 

[constructive]

Like a lot of pop financial writing, this seems really naive to me.

 

There is no recognition of the fact that $9B is an enormous amount of money and might be an appropriate fine. The writer just presents it as self-evident that however much it is, it should be more.

 

I also think the whistle-blower really screwed up her own legal strategy. If she wanted recognition and whistle blower money she shouldn't have assumed that the government would help her out. She should have sought out JPM's counterparties and testified for them.

[Otsog]

I don't think the amount was really the point of the article.  The fine was announced nearly ago, there has been coverage on whether the amount was appropriate (http://dealbook.nytimes.com/2013/11/20/in-13-billion-settlement-jpmorgan-may-have-gotten-a-good-deal/).  The point is that you can buy your way out of criminal prosecutions.  The substance of the article is the same subbing X for 9 in the title. 

 

I didn't get the impression Fleischmann was chasing recognition or money.  If she was, you're right, she went about it stupidly.  Her actions seem pretty inline with someone who preferred to stay under the radar, honor her NDA and be of service in criminal investigations. 

 

 

[Vizi1]

You could read Taibbi's book - The Divide

 

http://www.amazon.ca/The-Divide-American-Injustice-Wealth/dp/081299342X

 

It covers how the justice system for the bankers is different from the justice system of the common citizen.  Its a little preachy but it is well written.  At the end of the day its written to get people to be more aware of inconsistencies in the US Justice system.

 

The chapter on Fairfax I thought was well written and pretty accurate.

[JSArbitrage]

Criminal convictions were never going to happen - big banks/big bankers are basically the the defacto financing arm of American politics.  NYC bankers basically ARE the mainstream Democratic party.  Anyone that thought Obama was going to destroy his own party for fairness needs to move to a Scandinavian country or some egalitarian society. 

[constructive]

The substance of the article is the same subbing X for 9 in the title. 

 

Yeah, exactly. The writer kept the legal analysis superficial and didn't engage with the quantitative financial aspect at all. I have no interest in anyone's prescriptive opinions until they've demonstrated descriptive competence.

[Otsog]

If your thesis is that payment to avoid criminal prosecution is wrong then no amount of indulgence would really be acceptable.

 

It's interesting how different our takeaways are from that article.  I didn't at all get the impression that Taibbi was calling for larger fines, I think he was fully aware that $9 Billion is a lot of money and used that to make the point that JPM was willing to pay so much to avoid criminal charges.

 

 

 

[constructive]

Taibbi says financially illiterate stuff like this:

"Couple this with the fact that the bank's share price soared six percent on news of the settlement, adding more than $12 billion in value to shareholders, and one could argue Chase actually made money from the deal."

 

This article, and Taibbi's work generally, is really poorly constructed in terms of logical leaps, false assumptions, innuendo, etc. He just plays on the prejudices of his readers.

[woltac]

I really enjoyed the article. 

 

The criminal prosecution of a few individuals would have a greater positive impact on the culture at the big banks than billion dollar civil settlements. 

[rukawa]

I find that all of this is total bullshit. Supposedly we are supposed to hate banks for selling piles of crap to investors. But this was exactly what the federal government was pushing banks to do. How the heck did anyone think they would respond. And they still are! Banks are now refusing to originate mortgages of low credit quality because they don't want to accused again of selling crap and the government is saying "pretty please sell more crap". The government policy is completely schizophrenic. There is simply no way it could not result in problems or encourage fraud.

 

And lets remember where all this bullshit comes from. It comes from the ideological belief that the only way to build wealth is through housing. A belief that has not diminished even after the housing crisis.