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Should "endangering the global financial system" become a crime?

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    The article at http://coppolacomment.blogspot.co.uk...nuremberg.html is written by someone who used to work in banking. Her other posts are also worth a read.

    The three main proposals she has are:

    • The creation of a new international crime of "endangering the global financial system and/or seeking to profit from its collapse"
    • An international body under the aegis of the United Nations to identify those principally responsible for the 2008 financial crisis and where appropriate to bring prosecutions against them in the International Criminal Court
    • The establishment of a permanent international overseeing body for the global financial system, with powers to call to account, and if necessary bring prosecutions against, the management of systemically-important institutions who act recklessly in pursuit of individual or corporate profit.


    The reason essentially is that no one has been held properly accountable for what happened from 2008.

    What's your take on them?
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    As with all economics debates, I imagine that people will like or hate them depending on what their view on economics is. I predict that a great many people will object to the UN having any authority, as it will put hands in poorer nations to strip wealthier ones of their assets.

    I am skeptical that the international crime you mention could be successfully pinned down to such a degree that any accusation could stick and be turned into a prosecution.

    Finally, I imagine that many will argue that this will kill all risk-taking entrepreneurship, which is a major part of the creation of wealth in the first place.

    Frankly, I think the reason that nobody's been held accountable for the crash is because we are accountable. We criticise the banks for lending cheap money recklessly, but it is we who didn't complain about this when times were good, or refuse such offers.
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    You absolutely cannot prosectute people who caused the 2008 crisis. You cannot punish people for doing something that was not illegal at the time.

    Also I am sceptical that the people who caused the crisis knew that what they were doing would cause problems. I cannot see why someone would run a company into the ground because they all just lost their jobs 9the CEO's of major banks have almost all been replaced). Also we weren't complaining when we had cheap loans and could all afford houses. We are just as much to blame.
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    (Original post by Prince Rhyus)
    The article at http://coppolacomment.blogspot.co.uk...nuremberg.html is written by someone who used to work in banking. Her other posts are also worth a read.

    The three main proposals she has are:

    • The creation of a new international crime of "endangering the global financial system and/or seeking to profit from its collapse"
    • An international body under the aegis of the United Nations to identify those principally responsible for the 2008 financial crisis and where appropriate to bring prosecutions against them in the International Criminal Court
    • The establishment of a permanent international overseeing body for the global financial system, with powers to call to account, and if necessary bring prosecutions against, the management of systemically-important institutions who act recklessly in pursuit of individual or corporate profit.


    The reason essentially is that no one has been held properly accountable for what happened from 2008.

    What's your take on them?
    Absolutely not.

    This law would just be used to persecute people 'who got it right'. Loads of people are seeking to profit from the collapse of the system, because the system, in their view, started going wrong. The 'system' started taking a course which was doomed to fail. It was being led by the politicians and some of the largest banks in the world. These politicians are really the only ones to blame - yet they want to scapegoat the banking sector whilst it was entirely operating within the law.

    If someone is committing financial fraud - we already have laws for this and they should be dealt with accordingly.

    The poster above also correctly points out that trying to prosecute people for actions that were not crimes is grossly unjust.

    I definitely think we should re-evaluate our position, look to see what needs to change in the financial world etc. But it should not be led by the politicians. They will just ruin things once again.

    We should have a rule that there will be no bailouts. That was the real crime here. It has prolonged a recession which we could have and would have dealt with. It is providing corporate welfare to the richest people, at the expense of the poor.

    In other words - we need a return to a real free market, without the meddling of the politicians trying to influence winners and losers. People need to be encouraged to take responsibility for their own actions.
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    Ridiculous. The GFC was not the sole fault of irresponsible bankers in the finance industry, it was a cataclysmic mix of many factors. Who do we prosecute? The mortgage broker who sold the risky mortgage to the bank? The banker for selling the risky mortgage to the investment bank? The investment banker who securitised the mortgage and sold it to investors? The regulators and Central Banks who failed at their job? Or do we prosecute all of the irresponsible consumers who funded their lifestyle through unsustainable levels of private debt? The GFC was not just due to bankers' greed, we live in a culture that encourages debt that will take maybe a generation to eradicate.
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    (Original post by Prince Rhyus)
    The article at http://coppolacomment.blogspot.co.uk...nuremberg.html is written by someone who used to work in banking. Her other posts are also worth a read.

    The three main proposals she has are:

    • The creation of a new international crime of "endangering the global financial system and/or seeking to profit from its collapse"
    • An international body under the aegis of the United Nations to identify those principally responsible for the 2008 financial crisis and where appropriate to bring prosecutions against them in the International Criminal Court
    • The establishment of a permanent international overseeing body for the global financial system, with powers to call to account, and if necessary bring prosecutions against, the management of systemically-important institutions who act recklessly in pursuit of individual or corporate profit.


    The reason essentially is that no one has been held properly accountable for what happened from 2008.

    What's your take on them?
    Vaguely defined "crimes" that amount to 'string up the damn cappies!'. I hope for the sake of the rule of law that people like this aren't taken seriously by anyone who matters. That sort of crap belongs back in pre-1989 Eastern bloc.

    edit: To see this most clearly, the proposed fake crimes are contradictory. "Endangering the financial system" means inflating the bubble, but "seeking to profit from its collapse" means betting against the bubble! The "guiltiest" man is just the one wearing the most expensive suit.
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    Okay, so we create an international body, which answers to no individual government and no set of voters, and we allow this agency to enforce a law is so vague it could be interpreted as any number of things. Yeh, that can't go wrong.
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    That's an awful idea, as the people who realised the economy was about to collapse weren't the issue, it is the banks and the people who lend too much.

    Such legislation would just lead to bubbles lasting longer, which would be worse in the long run.
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    Any thoughts on the principle:

    "If your firms are multinational, then the regulator needs to be." (Taking aside the issue of how you make that regulator democratically accountable)
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    Yes, how dare people who saved or invested in PMs profit from the collapse of the house of cards that is fractional reserve banking and debt fueled bubbles caused by central banks?
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    (Original post by Prince Rhyus)
    Any thoughts on the principle:

    "If your firms are multinational, then the regulator needs to be." (Taking aside the issue of how you make that regulator democratically accountable)
    Again - absolutely not.

    Regulators are a big, big part of the problem. Definitely not part of the solution.

    This false sense of a 'safety net', leads down a very dangerous route, but nobody seems to recognise this despite everything that has gone on since 2008. I really don't understand sometimes.
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    I had no idea that Russia was considered a modern-day socialist utopia.
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    (Original post by Prince Rhyus)
    Any thoughts on the principle:

    "If your firms are multinational, then the regulator needs to be." (Taking aside the issue of how you make that regulator democratically accountable)
    A multinational regulator requires multinational regulations. There are obvious downsides to create an effective single world state from which there is no possibility of escape and within which there is no diversity of law.
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    ban otc derivatives by retail banks. FDIC only for customer accounts.
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    (Original post by Zenomorph)
    ban otc derivatives by retail banks.
    This is something I would agree with - separation of retail/commercial/wholesale from investment banking/trading type divisions. However - it needs to be consumer led, not regulation led. I'm not saying the government shouldn't pressure them, but customers threatening to withdraw all their money would be a lot more effective.

    (Original post by Zenomorph)
    FDIC only for customer accounts.
    This bit I disagree with. Are you American? FDIC in our country is FSCS :tongue:

    It should be removed. It does NOT create stability. Most people did not even know about the FSCS until Northern Rock happened, because they had no reason to care - and the EU forced each government to bump up the amounts to a massive €100,000 for each party, each bank.

    People need to start giving a **** - it's the only reform that is acceptable and that will work in the financial sector. We have a lot of wannabe hippies who would be disgusted when they are told the major banks fund all kinds of 'unethical' activities. But they'll continue to bank with them.

    If the FSCS is removed, banking activity is separated and there is legislation against any form of nationalisation or corporate welfare - we'll be on the right path. Yes people will lose their money - but they might educate themselves before investing with a bank or corporation again. They might start to actually take responsibility for their own financial decisions.

    It will also lead to the majority of bank accounts costing an annual fee, branches closing etc. and people starting to realise that retail banking actually isn't as profitable as the more 'exotic' form. Retail banking has actually been 'subsidised' by the more profitable, (higher) risk activities that banks undertake.

    Ideally, for a healthy retail banking sector we need a lot more banks and more diverse product range.

    We shouldn't seek to punish the high risk form of banking though - we should try to attract it to Britain and the City by all means. We shouldn't be reliant on them and we should let them know that nobody is too big to fail.
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    (Original post by gladders)
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    Frankly, I think the reason that nobody's been held accountable for the crash is because we are accountable. We criticise the banks for lending cheap money recklessly, but it is we who didn't complain about this when times were good, or refuse such offers.
    Quite right.

    It is the people who were in the drivers seat; they could have called the crazy game to order at any time, by no longer taking the loans, by campaigning for tighter lending standards or (most obviously) lobbying the government to properly supervise the financial sector.

    By the way, I think the proposal is asinine. You would struggle to get past an agreed definition of endangering, let alone defining the limits of the "global financial system". The question of remoteness, the absence of a proscribed act (anything could be endangering because it's only preparatory to the actual act that causes the harm), the fact that compliance costs would skyrocket and you still probably wouldn't be able to get something resembling a straight answer.

    It sounds like this woman cooked up this idea on the back of a napkin or beer coaster. Must try harder.
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    (Original post by Tom_Hagen)
    Regulators are a big, big part of the problem. Definitely not part of the solution.
    Regulators get their marching orders from politicians. When the politicians carefully structure, fund and support the regulators, and signal to the bureaucracy and market participants that it has the full support and confidence of the Prime Minister, you see very effective regulation like that coming from the Australian Prudential Regulation Authority.

    Not a single bank failure or a cent transferred to prop up a bank; in fact, post-crisis, Australia has four banks in the world top 25 measured by market cap, second only to the United States (which has six).

    Believe it or not, politicians will do as they're told if they have their chain yanked hard enough and the public is specific enough about what they want.
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    (Original post by Tom_Hagen)
    This is something I would agree with - separation of retail/commercial/wholesale from investment banking/trading type divisions. However - it needs to be consumer led, not regulation led. I'm not saying the government shouldn't pressure them, but customers threatening to withdraw all their money would be a lot more effective.



    This bit I disagree with. Are you American? FDIC in our country is FSCS :tongue:

    It should be removed. It does NOT create stability. Most people did not even know about the FSCS until Northern Rock happened, because they had no reason to care - and the EU forced each government to bump up the amounts to a massive €100,000 for each party, each bank.

    People need to start giving a **** - it's the only reform that is acceptable and that will work in the financial sector. We have a lot of wannabe hippies who would be disgusted when they are told the major banks fund all kinds of 'unethical' activities. But they'll continue to bank with them.

    If the FSCS is removed, banking activity is separated and there is legislation against any form of nationalisation or corporate welfare - we'll be on the right path. Yes people will lose their money - but they might educate themselves before investing with a bank or corporation again. They might start to actually take responsibility for their own financial decisions.

    It will also lead to the majority of bank accounts costing an annual fee, branches closing etc. and people starting to realise that retail banking actually isn't as profitable as the more 'exotic' form. Retail banking has actually been 'subsidised' by the more profitable, (higher) risk activities that banks undertake.

    Ideally, for a healthy retail banking sector we need a lot more banks and more diverse product range.

    We shouldn't seek to punish the high risk form of banking though - we should try to attract it to Britain and the City by all means. We shouldn't be reliant on them and we should let them know that nobody is too big to fail.
    Too risky, if thousands of people in the country are losing their deposits because of dodgy banks w/o deposit insurance is a recipe for disaster and would make the financial system even more insecure than it is now.

    Who says retail isn't profitable ? It is very profitable and virtually risk free.
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    (Original post by Zenomorph)
    Too risky, if thousands of people in the country are losing their deposits because of dodgy banks w/o deposit insurance is a recipe for disaster and would make the financial system even more insecure than it is now.

    Who says retail isn't profitable ? It is very profitable and virtually risk free.
    It is profitable - just not as profitable as the more higher risk banking functions.

    Retail banking is their bread and butter, but they've been neglecting it for a long time.

    And it isn't too risky - we'll see who keeps their money in RBS without deposit insurance. Yes there will be a run on the bank and they'll collapse. Good riddance. So will Lloyds Bank/HBOS, B&B and a few others. But that will be brilliant for the banking sector.

    It will allow banks like Co-Op, HSBC(maybe?), Barclays(very unlikely - but possible), Virgin/Branson amongst others - including new comers to pick up the pieces.

    That is capitalism. We can either purge the system now or prolong this stagnation for another 20 - 25 years before it involuntarily implodes anyway.

    Socialism, corporate welfare, whatever you want to call it is poison for our economy.
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    (Original post by Tom_Hagen)
    It is profitable - just not as profitable as the more higher risk banking functions.

    Retail banking is their bread and butter, but they've been neglecting it for a long time.

    And it isn't too risky - we'll see who keeps their money in RBS without deposit insurance. Yes there will be a run on the bank and they'll collapse. Good riddance. So will Lloyds Bank/HBOS, B&B and a few others. But that will be brilliant for the banking sector.

    It will allow banks like Co-Op, HSBC(maybe?), Barclays(very unlikely - but possible), Virgin/Branson amongst others - including new comers to pick up the pieces.

    That is capitalism. We can either purge the system now or prolong this stagnation for another 20 - 25 years before it involuntarily implodes anyway.

    Socialism, corporate welfare, whatever you want to call it is poison for our economy.
    No, I'm still unconvinced.
    Letting masses of people lose their savings w/o any fault on their own and not insuring them is irresponsible - could lead to mass social unrest.

    ALL banking business whether OTC or retail is in effect risk FREE, if you are one of the big boys - this has been vividly demonstrated.
    Virgin and co are already operating in banking, the REAL problem is that the likes of them are effectively barred from from bigger business

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