Opinion/debate (harsher penalties for financial crimes)

[The Yosemite Bear]

This question is a direct result of the Bernie Madoff story, my conservative redneck neighbors, and the actions of Goldman Sachs which no one is really sure is prosecutable, but legal experts all agree is Unethical, and should never have happened...

The locals while blaming Obama and Clinton for the current mess, and when one brings up the actions of Madoff, and GS prior to Obama taking office, and after that, insist that It's still market regulation at fault, and that Madoff and the GS CEO should just get the death penalty....

However since the current banking/comodities market problems are showing that some people used insider information, fake "Shell" corperations, artificial boosting, and other unethical actions and proven by past scandle to be counter productive, but are no longer illegal, does white colour crime deserve harsher penalties.....

[bobalot]

These types of crimes have always deserved greater penalties. A few years for serious misconduct that got hundreds (if not thousands) fired and ended up in the loss of millions/billions of dollars?

The only reason these people have gotten away with such measly sentences is because they are rich arseholes. Only the sheer public outrage at the last financial crisis ensured that the few people who got caught got some reasonable sentences.

Remember all those sandals when times were good? Most of these douchebags got off with a slap on the wrist.

[adam_grif]

My view on punishment for crimes in general:

The harshness of a penalty doesn't have much of an impact after a certain point. When people commit crimes, generally they do so under the assumption that they won't get caught. Obviously, something that is going to drag your name through the gutters, get your job taken from you, get you fined millions and / or sent to jail for years is already penalty enough.

Making it the death penalty might dissuade some small number of people from attempting it, but obviously the people who do it already don't treat it as some kind of trade, where they are trading temporary gain for long term penalties. If it was certain that they would get caught, nobody would ever do crimes like that.


White collar crime:

Not a clue. Don't know enough about it to form a valid opinion.

[bobalot]

My view on punishment for crimes in general:

The harshness of a penalty doesn't have much of an impact after a certain point.

That maybe true if you are referring to deterrence (for example the death penalty does not seem to be a great deterrent). However deterrence is not the only factor that is taken into consideration when determining a sentence. There is also punishment, is what people have an issue with.

When people commit crimes, generally they do so under the assumption that they won't get caught.

I don't see how this is really relevant. Most blue and white collar criminals don't carry out crimes expecting to be caught.

Obviously, something that is going to drag your name through the gutters, get your job taken from you, get you fined millions and / or sent to jail for years is already penalty enough.

I have heard this line of reasoning in the media when people talk about white collar crime. It's utter bullshit. Since when was getting humiliated and losing your job as a result of being a criminal considered when sentencing any other type of criminal?

Making it the death penalty might dissuade some small number of people from attempting it,

You know quite well that people are not seriously advocating a death penalty for white collar crimes but harsher penalties. As before, "dissuading" people from doing the crime (deterrence) is not the only factor considered in sentencing.

but obviously the people who do it already don't treat it as some kind of trade, where they are trading temporary gain for long term penalties. If it was certain that they would get caught, nobody would ever do crimes like that.

Not really relevant. This can be said of a lot of other crimes committed.

[Formless]

My view on punishment for crimes in general:

The harshness of a penalty doesn't have much of an impact after a certain point.

That maybe true if you are referring to deterrence (for example the death penalty does not seem to be a great deterrent). However deterrence is not the only factor that is taken into consideration when determining a sentence. There is also punishment, is what people have an issue with.

Hold it. Since when are penalties supposed to be self serving? You are saying that the purpose of punishment... is punishment. With that kind of reasoning you can justify any kind of punishment regardless of how ambiguously harsh or even cruel it is.

[Samuel]

I have heard this line of reasoning in the media when people talk about white collar crime. It's utter bullshit. Since when was getting humiliated and losing your job as a result of being a criminal considered when sentencing any other type of criminal?

Especially when the most obvious other example (pedophiles) do not recieve similar benefit of the doubt.

[Lord of the Abyss]

When people commit crimes, generally they do so under the assumption that they won't get caught.

Sometimes. And sometimes, they coldly calculate that even if they do get caught it'll be worth it because the profits outweigh the penalties. Something corporations are fairly infamous for doing. A serious punishment won't necessarily stop the foolish or irrational from committing a crime; but it WILL stop someone ruthless but rational from committing the crime while fully expecting to get caught.

In other words, it's not a good idea to set up a system where committing crime is in the rational self interest of someone.

Obviously, something that is going to drag your name through the gutters, get your job taken from you, get you fined millions and / or sent to jail for years is already penalty enough.

Why? At worst, go to a prison that's probably nicer than my own apartment for a few years, come out much richer than if you had obeyed the law, and be regarded as a superior being for the rest of your life because you are still rich. Forget any nonsense about their name being "dragged through the gutter".

[adam_grif]

I have heard this line of reasoning in the media when people talk about white collar crime. It's utter bullshit. Since when was getting humiliated and losing your job as a result of being a criminal considered when sentencing any other type of criminal?

Being humiliated and losing your job is just icing on the cake. Getting everything you earned with your illegal activities stripped, then fined additionally, and sent to jail for a term is the "punishment" you're looking for.

I'm mentioning it because white collar crime is being committed by politicians, prominent officials, CEOs of companies and so on. They lose far more from a criminal conviction than your average person would. Don't take this to mean I think that's "part of the sentance", it's not. But it's additional deterrence, and it's probably as effective or more effective in deterring than financial penalties ever would be. I'm mentioning it because I'm discussing the motivations people have and what they're taking into account when deciding to commit a thoroughly premeditated crime like this. It's a factor in the "if I get caught" part of the equation they're weighing up before they commit the crimes.

You know quite well that people are not seriously advocating a death penalty for white collar crimes but harsher penalties. As before, "dissuading" people from doing the crime (deterrence) is not the only factor considered in sentencing.

I'm not pretending anybody was suggesting that, I was bringing it up as an example of how harsher penalties don't necessarily deter people.

Not really relevant. This can be said of a lot of other crimes committed.

That's good, because I was talking about crime and punishment in general.

Sometimes. And sometimes, they coldly calculate that even if they do get caught it'll be worth it because the profits outweigh the penalties. Something corporations are fairly infamous for doing. A serious punishment won't necessarily stop the foolish or irrational from committing a crime; but it WILL stop someone ruthless but rational from committing the crime while fully expecting to get caught.

If you're talking about large corporations ignoring environmental laws because they make bucketloads more money by doing so, even though they will get caught, then I'll agree here.


Proposal:

Get rid of the traditional "pay XYZ dollars if you break this law" rubbish for crimes of this nature, and replace it with a system whereby it is determined how much money they made by breaking the law, and then they are fined that, plus the costs run up by the court in determining what they were to be charged and the running of the court, then an amount determined by the judge on top of that as a punishment.

That should stop this kind of crime pretty well dead in its tracks. It also means we don't run into situations where 25 years later, inflation means that the original penalty is now a laughably small sum.

[bobalot]

My view on punishment for crimes in general:

The harshness of a penalty doesn't have much of an impact after a certain point.

That maybe true if you are referring to deterrence (for example the death penalty does not seem to be a great deterrent). However deterrence is not the only factor that is taken into consideration when determining a sentence. There is also punishment, is what people have an issue with.

Hold it. Since when are penalties supposed to be self serving? You are saying that the purpose of punishment... is punishment. With that kind of reasoning you can justify any kind of punishment regardless of how ambiguously harsh or even cruel it is.

I said punishment is a factor when considering the sentence (It's length and severity). Factors such as deterrence, possibility of rehabilitation and punishment have to be taken into account when sentencing.

[Formless]

I said punishment is a factor when considering the sentence (It's length and severity). Factors such as deterrence, possibility of rehabilitation and punishment have to be taken into account when sentencing.

All that means is that you missed his point. OBVIOUSLY punishment is a factor when considering the sentencing, but what he was arguing was the the purpose of punishment needs to be considered before saying what is harsh enough punishment. Your statement had nothing to do with his point-- or if it did I can only hope I am misinterpreting your meaning.

[bobalot]

I said punishment is a factor when considering the sentence (It's length and severity). Factors such as deterrence, possibility of rehabilitation and punishment have to be taken into account when sentencing.

All that means is that you missed his point. OBVIOUSLY punishment is a factor when considering the sentencing, but what he was arguing was the the purpose of punishment needs to be considered before saying what is harsh enough punishment. Your statement had nothing to do with his point-- or if it did I can only hope I am misinterpreting your meaning.

What do you mean by the "purpose of punishment"?

[bobalot]

I have heard this line of reasoning in the media when people talk about white collar crime. It's utter bullshit. Since when was getting humiliated and losing your job as a result of being a criminal considered when sentencing any other type of criminal?

Being humiliated and losing your job is just icing on the cake. Getting everything you earned with your illegal activities stripped, then fined additionally, and sent to jail for a term is the "punishment" you're looking for.

I'm mentioning it because white collar crime is being committed by politicians, prominent officials, CEOs of companies and so on. They lose far more from a criminal conviction than your average person would.

The average blue collar criminal also loses all of this. They lose everything they gained through their criminal activities, they get humiliated, lose their jobs and have great difficultly finding a good job in future with a criminal record. It might not be the same in absolute financial terms, but it is effectively the same for the individual. How exactly do they lose far more? They often get sentences that pale in comparison when compared to blue collar criminals get and usually get sent to minimum security prisons.

Alan Bond a served mere 4 years for stealing $AUD 1.2 billion dollars.

You know quite well that people are not seriously advocating a death penalty for white collar crimes but harsher penalties. As before, "dissuading" people from doing the crime (deterrence) is not the only factor considered in sentencing.

I'm not pretending anybody was suggesting that, I was bringing it up as an example of how harsher penalties don't necessarily deter people.

Ah, my misatke. While your statement is true, it is also be possible to have lack of deterrence. A few years in a minimum security jail, the ability to transfer your assets to your spouses name and the option of declaring bankruptcy to avoid restitution is hardly a deterrent to white collar crime involving millions or billions of dollars.

Not really relevant. This can be said of a lot of other crimes committed.

That's good, because I was talking about crime and punishment in general.

I apologise for my error.

[Xon]

One of the major problems with the penalties for financial crimes is they let the criminals profit from them. Make several tens to hundreds of millions in profit, and get fined a few million, it's a no-brainer. That even if they are even charged!

[adam_grif]

Ah, my misatke. While your statement is true, it is also be possible to have lack of deterrence. A few years in a minimum security jail, the ability to transfer your assets to your spouses name and the option of declaring bankruptcy to avoid restitution is hardly a deterrent to white collar crime involving millions or billions of dollars.

No argument from me.

It's a situation where there is a minimum deterence, and if you go under this then everybody will do it (See: piracy and the internet), but once you've crossed this line, anything more is not going to do you any good (i.e. death penalty not reducing murder rates and so on).

Not strictly related, but it reminds me of the nature/nurture debate. No matter how good your genes are, you'll never be intelligent if you're malnourished significantly and don't get an education. Likewise, no matter how well you feed them or try to teach them, a gibbon is never going to reach human level intelligence.

Alan Bond a served mere 4 years for stealing $AUD 1.2 billion dollars.

Was it actual theft, or was he just being a bastard with amoral but technically legal proceedings?

[bobalot]

Alan Bond a served mere 4 years for stealing $AUD 1.2 billion dollars.

Was it actual theft, or was he just being a bastard with amoral but technically legal proceedings?

He used his controlling interest in Bell Resources to siphon off $1.2 Billion into his own failing Bond Corporation which is a breach of the company code. Bond Corporation collapsed under bad debts and almost destroyed Bell Resources in the process.

[adam_grif]

If he was jailed for 5 years for breaching company code as opposed to theft of 1.2 billion then it makes a lot more sense.

Still, see proposed solution above.

[bobalot]

If he was jailed for 5 years for breaching company code as opposed to theft of 1.2 billion then it makes a lot more sense.

Still, see proposed solution above.

That breach was theft. It was illegal to transfer money out of that company into his own in order to try and pay off his own debts.

[The Yosemite Bear]

What Goldman/Sachs is accused of:
US Prosecutors have leveled the following scheme at GS
1. GS created holding companys wich owed large numbers of adjustable rate morgages, while the housing market was boom.
2. They sold shares in these companys and claiming to be an outsider evaluating their own property rated these holding companys as AAA grade investments. (being one of the 5 biggest lending banks their opinions mean something)
3. knowing that these holding companys were full of toxic assits, GS short sold their own holding companys through other holding companys while telling others to invest in them.

So essentially they are eing called on "Insider Trading" however the defense arguement is that while GS may have owned company A which owned the toxic mortgages, which recieved the TARP funds, and company B which short sold the stock of company A, they had no knowledge of their operations....

[aieeegrunt]

Given the damage done to the heath of the US as a whole, and the fact that it was done deliberately with calculation for personal gain I'd say that treating it as treason would not be inappropriate.

[Eleventh Century Remnant]

Vengeance, deterrence, rehabilitation, restitution.

Money is international, and has no loyalties. Treason charges would be irrelevant.

Vengeance is emotionally attractive, and should be borne in mind as a fallback position, but the question is, how does this actually help? The whole point of a state controlled court and penal system is to avoid and supersede the natural, clan versus clan, house versus house, tribe versus tribe imperative of vengeance. Human history is rich with tales of bloody revenge- and human progress tends to happen when we outgrow shit like that. If we really are going back to the middle ages, bring it on...but I'd rather not.

Deterrence isn't going to work on financial crime. The incentives are just too great, and the chances of being caught at the moment far too low. Never mind the fact that the penalties just aren't there, and even if they were- I can't imagine any real data emerging on this. No-one is going to answer that survey question honestly. I don't believe they would work, I believe we have at least eight hundred years evidence of bankers' willingness to do anything and screw anyone for a buck. Or ducat, moidore, solidus aureus, etc.

Rehabilitation, into what? The upper working/lower middle class? The segment of society venture capitalists fall into tends to approve of them. They're already thoroughly habilitated.

Restitution, now there's an idea. Abolish the legally limited company and replace it with unlimited indemnity. Any mistake caused by malfeasance, any proven crime, the damage done is repaid out of the individual responsible's personal wealth. Mediated by malpractise insurance or the equivalent in practise, and some of the tab picked up by the company probably, and- the hard edges are going to get rubbed off a measure like that pretty quickly, I reckon, but it would be a start.

There would be drawbacks; for one, the chance of a false positive- catching and breaking a man for an innocent mistake- would be frighteningly high. For another, buck passing. On the other hand, it couldn't be worse than what we've got.

[Simon_Jester]

The US is (I am given to understand) a bit unusual in having a very narrow definition of the crime "treason." To commit treason against the United States you pretty much actively have to start shooting at us or passing ammo to someone who is. You most decisively cannot get convicted of treason merely for "damaging the country," even if you do a lot of damage.

In my opinion this was one of our founding constitutionalists' better ideas. A lot of their theories about how government would work turned out to be painfully naive (and now we're afraid to change them enough to fix the problems that came up in beta testing... ) or painfully conservative (ditto). But a rigorous definition of treason has the huge advantage of at once making treason a very serious crime and making it very difficult to convict someone purely because they are politically unpopular.

At this moment, people who commit mass-scale financial crimes are really unpopular, and even in the most favorable of times they deserve to be thought of as some of the biggest villains in the nation... but that doesn't make them traitors. And I don't want to set a precedent of calling people traitors for selling out the national interest for personal benefit- because I don't trust the judicial system to define the national interest correctly.

Punish them for all sorts of other crimes, fine; punish them harshly, OK. But let's find something other than treason to nail them on.

[fgalkin]

Confiscation of property- anyone convicted of a white-collar crime loses any and all property in his posession, in addition to serving a prison term. The property is auctioned off to cover the damages. Upon their release from prison, they are given a minumum temporary food and housing allowance, or are simply put on welfare, until they find a job.

Have a very nice day.
-fgalkin

[aieeegrunt]

That could get complicated; you'd have the familiar dodges of transfering assets to wives/relatives and whatnot, and now you're throwing women and children in the street. Personally I would have zero problem with that, given the number of families placed in that position by GS and the other banksters, but it could be hard to sell.

This is all pointless venting anyways, the current plutocracy isn't going to get reformed till it totally craters itself. Look at what happened with Health Care "Reform".

[Formless]

I said punishment is a factor when considering the sentence (It's length and severity). Factors such as deterrence, possibility of rehabilitation and punishment have to be taken into account when sentencing.

All that means is that you missed his point. OBVIOUSLY punishment is a factor when considering the sentencing, but what he was arguing was the the purpose of punishment needs to be considered before saying what is harsh enough punishment. Your statement had nothing to do with his point-- or if it did I can only hope I am misinterpreting your meaning.

What do you mean by the "purpose of punishment"?

I mean, why do we do it? What is our justification for it? Punishment is unusual ethically because normally we are trying to avoid causing harm, but punishments by nature cause harm. Therefor, there needs to be a purpose for doing it that is justifiable. Deterrence, restitution, and rehab are all justifiable purposes of punishment. Punishment for punishment's sake (i.e. revenge) is not.

[bobalot]

What do you mean by the "purpose of punishment"?

I mean, why do we do it? What is our justification for it? Punishment is unusual ethically because normally we are trying to avoid causing harm, but punishments by nature cause harm. Therefor, there needs to be a purpose for doing it that is justifiable. Deterrence, restitution, and rehab are all justifiable purposes of punishment. Punishment for punishment's sake (i.e. revenge) is not.

What happens when there is no chance for restitution, rehabilitation and deterrence is not all that effective (past a point)? Such as the case of some murderers?

You could say that we imprison such people to prevent further harm from the rest of society. But what were to happen if this person became a cripple in jail and no real threat to society, do we set this individual free because there is no obvious purpose other than revenge?