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Busted banker bashing

#1
In the WSJ (yes the fecking WSJ) Should Crimes of Capital Get Capital Punishment? By Jason Zweig
Overheard in midtown Manhattan at the lunch hour:

“Another day, another financial scandal. New regulations, prosecution, getting hauled up in front of Congressional hearings – nothing seems to stop it.”


“Maybe we need to try something more drastic.”


“Like what?”


“Well, there’s always the death penalty.”


Unfortunately, that’s been tried, too – and found wanting. Financial criminals throughout history have been beaten, tortured and even put to death, with little evidence that severe punishments have consistently deterred people from misconduct that could make them rich.


The history of drastic punishment for financial crimes may be nearly as old as wealth itself.


The Code of Hammurabi, more than 3,700 years ago, stipulated that any Mesopotamian who violated the terms of a financial contract – including the futures contracts that were commonly used in commodities trading in Babylon – “shall be put to death as a thief.” The severe penalty doesn’t seem to have eradicated such cheating, however.


In medieval Catalonia, a banker who went bust wasn’t merely humiliated by town criers who declaimed his failure in public squares throughout the land; he had to live on nothing but bread and water until he paid off his depositors in full. If, after a year, he was unable to repay, he would be executed – as in the case of banker Francesch Castello, who was beheaded in 1360. Bankers who lied about their books could also be subject to the death penalty.


In Florence during the Renaissance, the Arte del Cambio – the guild of mercantile money-changers who facilitated the city’s international trade – made the cheating of clients punishable by torture. Rule 70 of the guild’s statutes stipulated that any member caught in unethical conduct could be disciplined on the rack “or other corrective instruments” at the headquarters of the guild.


But financial crimes weren’t merely punished; they were stigmatized. Dante’s Inferno is populated largely with financial sinners, each category with its own distinctive punishment: misers who roll giant weights pointlessly back and forth with their chests, thieves festooned with snakes and lizards, usurers draped with purses they can’t reach, even forecasters whose heads are wrenched around backward to symbolize their inability to see what is in front of them.


Counterfeiting and forgery, as the historian Marvin Becker noted in 1976, “were much less prevalent in Florence during the second half of the fourteenth century than in Tuscany during the twentieth century” and “the bankruptcy rate stood at approximately one-half [the modern rate].”


Still, bank failures were far more common in the medieval and Renaissance periods than they are today. The biggest banks in the world routinely collapsed throughout the premodern era; as a leader of Venice observed in 1584, of 103 banks that had been founded there, 96 had failed.


In England, counterfeiting was punishable by death starting in the 14th century, and altering the coinage was declared a form of high treason by 1562.


In the 17th century, the British state cracked down ferociously on counterfeiters and “coin-clippers” (who snipped shards of metal off coins, yielding scraps they could later melt down or resell). The offenders were thrown into London’s notorious Newgate prison. The lucky ones, after being dragged on planks through sewage-filled streets, were hanged. Others were smeared with tar from head to toe, tied or shackled to a stake, and then burned to death.


The British government was so determined to stamp out these financial crimes that it put Sir Isaac Newton on the case. Appointed as warden of the Royal Mint in 1696, Newton promptly began uncovering those who violated the financial laws of the nation with the same passion he brought to discovering the physical laws of the universe.


The great scientist was tireless and merciless. Newton went undercover, donning disguises to prowl through prisons, taverns and other dens of iniquity in search of financial fraud. He had suspects brought to the Mint, often by force, and interrogated them himself. In a year and a half, says historian Carl Wennerlind, Newton grilled 200 suspects, “employing means that sometimes bordered on torture.”


When one counterfeiter begged Newton to save him from the gallows – “O dear Sr no body can save me but you O God my God I shall be murderd unless you save me O I hope God will move your heart with mercy and pitty to do this thing for me” – Newton coldly refused.


The counterfeiter was hanged two weeks later.


Until at least the early 19th century, it remained commonplace for counterfeiters and forgers to be put to death; between 1792 and 1829, for example, notes Wennerlind, 618 people were convicted of counterfeiting British paper currency, and most of them were hanged. Many were women.


But the overhead costs of such financial crime were low, most malefactors were never detected – even by Newton – and the upside was huge. As a modern Wall Streeter would say, there was “lots of optionality” to monetary fraud. So counterfeiting and financial forgery continued to thrive in England (and elsewhere) despite the draconian punishments and an endless series of laws and regulations. It dwindled only after easier ways to make a fortune arose.


What history suggests, then, is that so long as people think they can get rich by bending or breaking the rules, it doesn’t matter all that much how tough the rules or punishments are. Wall Street offers its risk-takers the potential to earn tens of millions, even hundreds of millions of dollars, when bets pay off, with no real penalties when bets go bad. Until – or unless – that culture changes, nothing fundamental will change.
My bold, in the fecking WSJ!
 

Bouillabaisse

LE
Book Reviewer
#3
I've always felt that there should be more to this risk/reward system that bankers seem to have. After all, they claim that they get the big bonuses (boni?) as a reward for the big risks they take, but there seems to be little come back for failure. It must be possible to make a league table of bankers - there's a handy metric in how much money they make. At the end of every financial year the worst performing person should be taken out in front of the Bank of England and shot.
 
#4
Would "Crimes of Capital" include expenses fraud by MPs? I understand honourable members are now able to avoid prosecution by becoming really, really upset by the prospect of a prison sentence. They even get to keep the proceeds of their crimes to help them recover from their ordeal.
 
#5
Would "Crimes of Capital" include expenses fraud by MPs? I understand honourable members are now able to avoid prosecution by becoming really, really upset by the prospect of a prison sentence. They even get to keep the proceeds of their crimes to help them recover from their ordeal.
Hardly, such petty affairs dwindle into insignificance beside some of the epic beak dipping that goes on in finance. The British public obsessing on exceedingly small change in the wake of Lehman did provide a convenient smoke screen. In Ireland our scape grace financial elite didn't even feel the need of such useful cover.
 
#6
Hardly, such petty affairs dwindle into insignificance beside some of the epic beak dipping that goes on in finance. The British public obsessing on exceedingly small change in the wake of Lehman did provide a convenient smoke screen. In Ireland our scape grace financial elite didn't even feel the need of such useful cover.
Widespread, systematic corruption, fraud and forgery by members of the ruling party. That's not what I'd call either petty or insignificant. Fortunately the judges who sent the buggers to prison didn't see it that way either.
 
#7
Widespread, systematic corruption, fraud and forgery by members of the ruling party. That's not what I'd call either petty or insignificant. Fortunately the judges who sent the buggers to prison didn't see it that way either.
And duck houses, do get a sense of proportion. Is there one case involving millions? Did this mostly petty stuff really threaten the entire British economy with collapse?

With the banks we are talking about a billion here, a billion there and then sometimes even the sort of real money the Irish state's been left holding the tab for due to a systematic culture of appallingly low ethics that the same state has chosen not to criminalize in the way Iceland did. They've only pursued a few developers who look more like victims of unscrupulous banking practices in some cases. On the other hand our senior politicians seem to be able to get away with trousering brown envelopes with an immunity denied British MP's who feel the need of a bit of tax payer assistance with moat cleaning.
 
#8
The article failed to mention that in China fraud, embezzlement, bribery, counterfeiting etc. are indeed on the list of things one can be executed for. Do we think China is becoming more or less corrupt?
 

Alsacien

MIA
Moderator
#9
Theodoros Pantalakis, former chief executive of the Agricultural Bank (ATEbank), guess what country he comes from?

Mr Pantalakis resigned from ATEbank last month after Piraeus Bank bought most of its decent assets.
ATEbank made loans of more than 150m euro to the two main political parties - currently being investigated.

Mr Pantalakis just sent Euro 8 million to his UK account to buy a nice new house in the UK.....
 
#10
Theodoros Pantalakis, former chief executive of the Agricultural Bank (ATEbank), guess what country he comes from?

Mr Pantalakis resigned from ATEbank last month after Piraeus Bank bought most of its decent assets.
ATEbank made loans of more than 150m euro to the two main political parties - currently being investigated.

Mr Pantalakis just sent Euro 8 million to his UK account to buy a nice new house in the UK.....
Your just jealous... I know I am.
 

jarrod248

LE
Gallery Guru
#11
Would "Crimes of Capital" include expenses fraud by MPs? I understand honourable members are now able to avoid prosecution by becoming really, really upset by the prospect of a prison sentence. They even get to keep the proceeds of their crimes to help them recover from their ordeal.
You just don't like Baronness Warsi, you're a meanie, she didn't do anything wrong, no not a thing.
 
#12
And duck houses, do get a sense of proportion. Is there one case involving millions? Did this mostly petty stuff really threaten the entire British economy with collapse?

With the banks we are talking about a billion here, a billion there and then sometimes even the sort of real money the Irish state's been left holding the tab for due to a systematic culture of appallingly low ethics that the same state has chosen not to criminalize in the way Iceland did. They've only pursued a few developers who look more like victims of unscrupulous banking practices in some cases. On the other hand our senior politicians seem to be able to get away with trousering brown envelopes with an immunity denied British MP's who feel the need of a bit of tax payer assistance with moat cleaning.
The banks, "a few developers" - who bought the products? EVERYONE was loving the free money in both the UK and ROI and jumped into the property market feet first.

Millions bought into the bubble - only a few get the blame. In some ways I don't blame the bankers I blame the people that bought their products thinking that a four bed was really worth 5 X the average local salary.

Caveat Emptor and all that Latin type stuff IMO.
 
#13
The banks, "a few developers" - who bought the products? EVERYONE was loving the free money in both the UK and ROI and jumped into the property market feet first.

Millions bought into the bubble - only a few get the blame. In some ways I don't blame the bankers I blame the people that bought their products thinking that a four bed was really worth 5 X the average local salary.

Caveat Emptor and all that Latin type stuff IMO.
The idiot who kept on peddlingt the nonsense that he'd personnelly ended "Boom and Bust" and was personnlly respsonsible for this mass wealth sharing pontz scheme..?
 
#14
The idiot who kept on peddlingt the nonsense that he'd personnelly ended "Boom and Bust" and was personnlly respsonsible for this mass wealth sharing pontz scheme..?
Agreed. Broon helped but markets are driven by the activity of individuals, nobody made people take on debt or mortgages that were not sustainable - Broon may have encouraged the gullible to believe that boom and bust had gone, but good old human greed helped many into the mindset where it's easier to blame the bankers rather than themselves for the personal financial mess they are in.

All will be corrected. Buy farm land and gold. Out.:)
 
#15
The banks, "a few developers" - who bought the products? EVERYONE was loving the free money in both the UK and ROI and jumped into the property market feet first.

Millions bought into the bubble - only a few get the blame. In some ways I don't blame the bankers I blame the people that bought their products thinking that a four bed was really worth 5 X the average local salary.

Caveat Emptor and all that Latin type stuff IMO.
That's very liberal of you, spreading the blame so widely, I get it, society is to blame gov, that ain't a fair cop. I'm sure you apply that to drug dealers as well.

Thing is if you bought a four bed at the height of the Irish boom you are probably in serious financial trouble and are paying for your sins. You may well be being sued by the same bank for non-payment of a mortgage that if they had shown any due diligence would never have been offered. These are now largely state owned institutions which you are basically working a day a week to pay up the vast debt they racked up to foreign bondholder.

Meanwhile the eigits who eagerly loaned you and 20% of the Irish homeowners the money that kept those prices rocketing up are mostly fat and happy employees who made very nice bonuses off loans only a fool would consider prudent. There's been no mass firing of senior people who are either incompetent or rogues let alone prosecutions and they are only slightly less comfortable now.

Life isn't fair of course but the young couple who were desperate to get on a soaring property ladder have learnt their lesson the hard way, they're wiped out and they'll likely die poor miserable pensioners who are painfully careful with money. I see no reason at all why I would not do the same thing again in the bankers very expensive loafers. Never give a sucker an even break and if you have a whole polity of suckers so willing just to turn the other cheek repeatedly you are going to do what comes natural and **** them.

I don't blame the bankers, they're victims of a set of vastly generous incentives and low risks of personal loss that few could resist, the flesh is weak and men sin. They were larger actors in a moment of exuberantly foolish capitalism who enjoy a very privileged position having ideologically captured government. It's a bit like being a Priest in Dev's theocracy, treated with immense respect by fawning Culchies, the worst they risk for tampering with a pretty choirboy is a confrontation with an angry parent, a slap on the wrist from the Bishop and a Parish move, with new sensuous opportunities ever few years. And the good times rolled on and on for decades. It's the servile eigit who like mothers in deference to Father Murphy's status blame the sinful tempting child and insist there nothing fundamentally wrong with the status quo that I find a mite perplexing.
 
#17
That's very liberal of you, spreading the blame so widely, I get it, society is to blame gov, that ain't a fair cop. I'm sure you apply that to drug dealers as well.

Thing is if you bought a four bed at the height of the Irish boom you are probably in serious financial trouble and are paying for your sins. You may well be being sued by the same bank for non-payment of a mortgage that if they had shown any due diligence would never have been offered. These are now largely state owned institutions which you are basically working a day a week to pay up the vast debt they racked up to foreign bondholder.

Meanwhile the eigits who eagerly loaned you and 20% of the Irish homeowners the money that kept those prices rocketing up are mostly fat and happy employees who made very nice bonuses off loans only a fool would consider prudent. There's been no mass firing of senior people who are either incompetent or rogues let alone prosecutions and they are only slightly less comfortable now.

Life isn't fair of course but the young couple who were desperate to get on a soaring property ladder have learnt their lesson the hard way, they're wiped out and they'll likely die poor miserable pensioners who are painfully careful with money. I see no reason at all why I would not do the same thing again in the bankers very expensive loafers. Never give a sucker an even break and if you have a whole polity of suckers so willing just to turn the other cheek repeatedly you are going to do what comes natural and **** them.

I don't blame the bankers, they're victims of a set of vastly generous incentives and low risks of personal loss that few could resist, the flesh is weak and men sin. They were larger actors in a moment of exuberantly foolish capitalism who enjoy a very privileged position having ideologically captured government. It's a bit like being a Priest in Dev's theocracy, treated with immense respect by fawning Culchies, the worst they risk for tampering with a pretty choirboy is a confrontation with an angry parent, a slap on the wrist from the Bishop and a Parish move, with new sensuous opportunities ever few years. And the good times rolled on and on for decades. It's the servile eigit who like mothers in deference to Father Murphy's status blame the sinful tempting child and insist there nothing fundamentally wrong with the status quo that I find a mite perplexing.
Slightly tangental to bring in the Roman Church, seems we have a lot to thank Henry VIII for this side of the water. I like being called a liberal too.

Here's the thing, in the last round of serious economic unpleasantness (early nineties) I made lots of silly financial decisions, buying a range of financial products that with hindsight were sheer lunacy, and guess what it was ALL MY FAULT, no one made me do it. Yes the banks made the products but I made the decisions and I did the sums, or so I thought..........

By the way this desparate young man learnt his lessons and in reality was not ruined for life but took about six to seven years to get back on his feet and develop a sound financial knowledge (IMO:) ) that prevented him from making the same mistakes with similar products in the last housing boom. Retirement does not worry me for similar reasons. The same steep learning curve will apply to the current crop of late twenty somethings and most will learn and some will not come the next housing boom.
 
#18
I've always felt that there should be more to this risk/reward system that bankers seem to have. After all, they claim that they get the big bonuses (boni?) as a reward for the big risks they take, but there seems to be little come back for failure. It must be possible to make a league table of bankers - there's a handy metric in how much money they make. At the end of every financial year the worst performing person should be taken out in front of the Bank of England and shot.
I never understood how they justified describing themselves as 'the risk-takers'.

In their professional capacity, it's other people's money they're playing with and it's those people who're taking the risks.

If they're making the same decisions on their own private investments then they're doing so in a private capacity and their reward is any return on their investment, not linked to their salaries, bonuses or any other professional remuneration.

So what 'risk' are they actually taking in their professional lives? Nothing as risk is understood by the ordinary bloke and blokess, so far as I can see.

If it's been sent from my HTC Sensation using Tapatalk then I'm probably pissed.
 
#20
That's very liberal of you, spreading the blame so widely, I get it, society is to blame gov, that ain't a fair cop. I'm sure you apply that to drug dealers as well.

Thing is if you bought a four bed at the height of the Irish boom you are probably in serious financial trouble and are paying for your sins. You may well be being sued by the same bank for non-payment of a mortgage that if they had shown any due diligence would never have been offered. These are now largely state owned institutions which you are basically working a day a week to pay up the vast debt they racked up to foreign bondholder.

Meanwhile the eigits who eagerly loaned you and 20% of the Irish homeowners the money that kept those prices rocketing up are mostly fat and happy employees who made very nice bonuses off loans only a fool would consider prudent. There's been no mass firing of senior people who are either incompetent or rogues let alone prosecutions and they are only slightly less comfortable now.

Life isn't fair of course but the young couple who were desperate to get on a soaring property ladder have learnt their lesson the hard way, they're wiped out and they'll likely die poor miserable pensioners who are painfully careful with money. I see no reason at all why I would not do the same thing again in the bankers very expensive loafers. Never give a sucker an even break and if you have a whole polity of suckers so willing just to turn the other cheek repeatedly you are going to do what comes natural and **** them.

I don't blame the bankers, they're victims of a set of vastly generous incentives and low risks of personal loss that few could resist, the flesh is weak and men sin. They were larger actors in a moment of exuberantly foolish capitalism who enjoy a very privileged position having ideologically captured government. It's a bit like being a Priest in Dev's theocracy, treated with immense respect by fawning Culchies, the worst they risk for tampering with a pretty choirboy is a confrontation with an angry parent, a slap on the wrist from the Bishop and a Parish move, with new sensuous opportunities ever few years. And the good times rolled on and on for decades. It's the servile eigit who like mothers in deference to Father Murphy's status blame the sinful tempting child and insist there nothing fundamentally wrong with the status quo that I find a mite perplexing.
The problem in Ireland during the peak of the boom was that even entry level homes were ridicously expensive, so that, with an almost non-existing and overpriced letting market, young people had to stay with their parents well into their 30s before they had saved enough and progressed enough in their careers to be able to afford a place of their own.
When I was living in Shannon, Co. Clare, during the late 90s, I couldn´t afford a place of my own. Instead I was forced to share a house with several coworkers, with each of us having one room. The places for rent in Ireland at this time were usually furnished with junk furniture, because law said that if a certain amount of furniture was in the house the landlord could charge extra. Often the stuff came from auctions and second hand sales.
Even today my fiancée in Dublin can´t afford a place of her own. She is in her late 30s and works in nursing management, but has to share a house with another Filipina coworker and her teenage daughter.
Houses in Ireland are still very much overpriced, even in rural Ireland they would charge € 100.000 for a place I could get here in rural Germany for €50.000.
Some British colleagues of mine, upon seeing the low housing prices around here (and the nice landscape around the Moselle river) decided to buy a house here and to live here permanently.

Another thing is that German banks usually won´t give you a 100 % loan. They will demand about 20% of your own capital up front, plus they will check your employment and credit history.
 

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