Why no one is going to jail for the banking crisis

[Brendan Burgess]

But someone should still go to jail - It doesn't matter that these weren't the acts bankrupted the country.

It's not fair to say "someone should go to jail..." as if this will somehow satisfy the mob.

If someone is found guilty of a serious crime, they should go to jail. If many people are found guilty of serious crimes, they should all go to jail.

Brendan

 

[onq]

Its possible to argue no-one did anything if you take it to the limit.
Say a guy shots a man and kills him in a premeditated manner.

Let's apply some event-deconstructing logic to this -

- Buying the gun didn't kill the man.
- Loading the gun didn't kill the man.
- Carrying the gun in a concealed manner didn't kill the man.
- Pointing the gun didn't kill the man.
- Pulling the trigger didn't kill the man.
- The unfortunate route of the bullet through the aorta didn't kill the man.
- In fact the bullet could statistically have passed through the man without incident.
- The man could have moved causing the bullet to miss.
- The bleeding could have been brought under control and the man need not have died
- The man died from blood loss after an unfortunate accident.

Sorry, I don't buy that kind of logic.
These people all but destroyed our economy.
A monstrous crime against prince and pauper alike.

 

[onq]

It's not fair to say "someone should go to jail..." as if this will somehow satisfy the mob.

If someone is found guilty of a serious crime, they should go to jail. If many people are found guilty of serious crimes, they should all go to jail.

Brendan

It is entirely fair to say "someone should go to jail" when a monstrous crime has been committed against a nation and a people.

And if we find that this monstrous crime is not spelled out in some statute or other, simply because of the scale of it and the unimaginable over-reaching effects of it, we'll convene a fact finding tribunal like they did after WWII and set a precedent.

 

[onq]

You know, reading back over the past three posts I see we're not that far apart.

I think we're stuck on our differing definitions of "crime".

That can change.

 

[DerKaiser]

It's not fair to say "someone should go to jail..." as if this will somehow satisfy the mob.

If someone is found guilty of a serious crime, they should go to jail. If many people are found guilty of serious crimes, they should all go to jail.

Brendan

Absolutely. If it's proven the actions taken to prop up the share price and deliberately misrepresent the accounts were crimes the perpetrators should be jailed.

 

[Jim2007]

If this were Amercia we won't be even having this debate.

Why?

Because most of them would have had at the very least been asset stripped and plenty would be in jail.

I've yet to hear of anyone going to jail in the US for their actions during the boom and in their case there is clear evidence of mortgage fraud in many situations....

During the same period, a UBS employee who acted as whistle blower on millions that wealth Americans were hiding away, was give sent to jail for 42 months, while at the same time his boss was allowed to talk free....

And of course we should not forget that at end of Dot Com boom, despite all Eliot Spitzer's prosecutions only a couple of out and out criminals went to jail. In fact the only one of note I can remember who went to jail was Marta Steward!

I'm not all impressed by the US legal system...

Jim.

 

[Jim2007]

It is entirely fair to say "someone should go to jail" when a monstrous crime has been committed against a nation and a people.

Well in that case lets put the Irish citizen in jail after all he voted in the politicians, he was the one that borrowed the money, built up the credit card debt and even when everyone knew it was out of control, he still kept repeating himself!!!

There was no monstrous crime committed as you suggest, was and is the nature of bubbles and there is is very little that anyone can do!!! Several months back I recommended a book called http://www.amazon.co.uk/Extraordinary-Popular-Delusions-Wordsworth-Reference/dp/1853263494/ref=sr_1_1?ie=UTF8&qid=1316865819&sr=8-1 ("Extraordinary Popular Delusions & the Madness of Crowds"), if you have not already read it, I really suggest that you do, because it shows how out of control people get during bubbles.

At the moment, we are experiencing a small property bubble here in Switzerland, as a result of all the cash being deposited in Swiss banks and their need to lend it out in order to make a return. Last week the Swiss government moved to try and defuse the growing bubble by requiring all borrowers to put up a minimum of 20% of the purchase price in hard cash.... immediately there was an out cry from the building industry, from borrowers and so on. But the Swiss government had the luxury of being able to point to the Irish situation as the reason for their actions, without that recent example, they would have had very little chance of convincing the people, who go the polls in October of accepting it. Crowds tend to have a very short memory!

And while I believe there is not much we can do to prevent bubbles, there is a lot as individuals we can do to ensure that we are not overly impacted by then.

Best regards,

Jim.

 

[bullworth]

Well in that case lets put the Irish citizen in jail after all he voted in the politicians, he was the one that borrowed the money, built up the credit card debt and even when everyone knew it was out of control, he still kept repeating himself!!!

Well the Irish citizen who had least responsibility is certainly suffering now apart from the protected sectors who held most responsibility and who had their hands on the tiller of the economy. Nobody was elected on a platform of destroying the economy, bailing out bankers and developers and setting up NAMA. Nobody had fraud in their election manifesto. It's unfair and unreasonable to expect the average citizen to have an understanding of economics to degree level. The average social contract was that they get their degrees etc and then work 9 to 5 or longer plus hours of commuting due to bad planning leaving no time for these nighttime economics classes whereas the politicians and civil servants had the best pay and conditions of everyone. After all it's those in power who had the best education , grew up with a silver spoon in their mouths etc. To then take more than their fair share when already given so many advantages in life is pure greed. And not one of them has suffered compared to someone who needs to buy schoolbooks and might overlook paying their TV licence.
It's inescapable logic that those employed to do a specific job failed to do it. Let's start with the regulator and the ex government. If regulators etc were charged with negligence and a dereliction of duty; and if a case could be proven against anyone then it wouldnt be long before whistles start getting blown and more people get the attention they deserve. Perhaps its the case that our whole body politic is corrupt and that everyone including the obvious scapegoats knows where everyone elses bodies are buried therefore none of them are going to jail because to do otherwise is to bring them all down.

 

[onq]

Well in that case lets put the Irish citizen in jail after all he voted in the politicians, he was the one that borrowed the money, built up the credit card debt and even when everyone knew it was out of control, he still kept repeating himself!!!

There was no monstrous crime committed as you suggest, was and is the nature of bubbles and there is is very little that anyone can do!!! Several months back I recommended a book called http://www.amazon.co.uk/Extraordinary-Popular-Delusions-Wordsworth-Reference/dp/1853263494/ref=sr_1_1?ie=UTF8&qid=1316865819&sr=8-1 ("Extraordinary Popular Delusions & the Madness of Crowds"), if you have not already read it, I really suggest that you do, because it shows how out of control people get during bubbles.

The responsibility of the government is to govern. They didn't.
The responsibility of the lending companies is to advise their clients competently and professionally. They didn't.
The responsibility of company directors is to run the company within the law and disclose the company accounts truthfully. The didn't.

These things together resulted in a monstrous crime perpetrated against the electorate, when the previous incompetent government shored up the perfidious, lying banks having failed to regulate them.

You apologia above is of the same species as suggesting it would be okay for police to fail to contain a riot - because people sometimes riot! It wouldn't.

 

[Brendan Burgess]

These things together resulted in a monstrous crime perpetrated against the electorate

Hi Onq

What particular criminal law did they break. The whole point of this thread is to try to explain that for someone to go to jail they must commit a crime. Incompetence is simply not a crime.

You might feel very annoyed at incompetence of our regulators, our politicians and our bankers, but until you have identified a crime, you shouldn't accuse them of being criminals - especially monstrous criminals.

 

[onq]

Hi Brendan,

Negligence is not just a civil matter, where it leads to death, significant loss of profit or personal wealth, or in this case beggars and economy.

"In general, legislators have criminalised actions which are agreed to be "morally wrong", which have serious adverse consequences on a society-wide basis, which were intentional and for which there was no reasonable excuse."

That's a good rule of thumb in this case.

A lot of people have taken their own lives over the present economic disaster and Ireland has gone from being the most successful European economy to one of the worst.

It is disgraceful to see people of your stature apparently paving the way for a do-not-go-to-jail card for the people who brought this disaster upon us.

These are people who misled the government into giving the banking guarantee and who - to this day, in the case of former Anglo employees - are refusing to divulge pertinent information to the authorities trying to manage and investigate this massive fraud perpetrated on the Irish people.

There is no "reasonable excuse" for their behaviour.

It is even gilding the lily to suggest it was negligence.

In my opinion this was done knowingly and with foresight, because the banks knew they would be bailed out by the government just like they were following the ICI Scandal.

 

[Black Sheep]

What really gets under my skin and the skin of many others is, not a shred of punishment was given to these people, bankers, politicons, regulator,senior civil servants etc.

Those who lost their jobs were rewarded with golden hand shakes. Why would they remain on in a job if they could go a couple of years early on full pension plus the lump sum to set them up nicely in retirement.

If that's the way to reward incompetence, how is good behaviour rewarded?????????

 

[Jim2007]

The responsibility of the government is to govern. They didn't.

Agreed, but the people have accepted it???

responsibility of the lending companies is to advise their clients competently and professionally. They didn't.

To the best of my knowledge, the bank has customers not clients and they have no more responsibility to them than the corner shop!

responsibility of company directors is to run the company within the law and disclose the company accounts truthfully. The didn't.

If that is the case, then in time I expect that those directors will be prosecuted. However, so far the only questionable act I have heard is the B&B of the famous loans and that is it.

things together resulted in a monstrous crime perpetrated against the electorate, when the previous incompetent government shored up the perfidious, lying banks having failed to regulate them.

You apologia above is of the same species as suggesting it would be okay for police to fail to contain a riot - because people sometimes riot! It wouldn't.

I can understand your frustration, but at the end of the day you can only send people to prison for crimes they have committed. And so far we're very long on opinions and very shot on evidence!

Back in the 1980s I worked in the insolvency dept. of one of the big 4 accounting firms and I worked in drawing up the book of evidence in a few cases against directors and I can tell you that it is not as easy as everyone thinks to go after someone! First of all hinsight counts for nothing and there in lies the problem how to do you prove that say back in 2005 one person had such fantastic insight that they saw what was coming and used it to exploit others. You can only hold people to the standards and norms that were in place that the time, not what you see to be true in hinsight. Can you hold an estate agent or similar professional at fault for placing a valuation of 400K on a property at the time and is now only worth say 200K on the basis that he should have known what was coming???

As I have already said, bubbles are a fact of life and there is not much we can do to stop them. All we can do is try to understand them and hopefully avoid being pulled into them at a personal level.

Jim

 

[Jim2007]

In my opinion this was done knowingly and with foresight, because the banks knew they would be bailed out by the government just like they were following the ICI Scandal.

Let me ask you this, as someone who works in the building industry what did you do to warn your clients of the impending melt down???

Jim

 

[Guest105]

Ahem .......anyone who says the banks have a clear conscience must be mad, what did they do to stress test all those who over borrowed, giving hundreds of thousands of euro to people who were near retirement age to buy investment properties and overseas holidy homes, releasing equity in homes where people had no means of paying it back. Was there not a case on here somewhere of a 21 year old getting a massive mortgage and what about those letters the banks posted thorugh our letter boxes literally begging us to borrow x amount. No one forced anyone to borrow but there is enough evidence out there to say the banks failed in their duty of care and they are sure paying the price for it now. They went to jail for their crimes in America why not Ireland.

 

[Jim2007]

Ahem .......anyone who says the banks have a clear conscience must be mad, what did they do to stress test all those who over borrowed, giving hundreds of thousands of euro to people who were near retirement age to buy investment properties and overseas holidy homes, releasing equity in homes where people had no means of paying it back. Was there not a case on here somewhere of a 21 year old getting a massive mortgage and what about those letters the banks posted thorugh our letter boxes literally begging us to borrow x amount.

As long as a bank adheres to the various capital ratios etc... set out by the regulators, it is free to set it's own credit and lending policies. There is no obligation to stress test anyone or do anything else in respect of ensuring that a person is in a position to pay back the money. As the law stands, a bank is just like the corner shop or a supermarket - it offers certain products to the public and it is up to the public to buy them or not as the case may be. If you want financial advice you consult a financial advisor or an accountant, not a bank!!!

one forced anyone to borrow but there is enough evidence out there to say the banks failed in their duty of care and they are sure paying the price for it now. They went to jail for their crimes in America why not Ireland.

A bank has no duty of care to a customer, just as a supermarket does not have a duty of care to ensure that it's customers don't eat to much fatty foods or whatever!

As for the US, please provide us with a list of who went to jail in the US for mortgage fraud... I've seen this statement here several times now, but I've yet to see the facts to match it.

In a bubble, bankers do what bankers do, consumers do what consumers do, but politicians seldom do what politicians should do - burst the bubble! The government should have shown leadership and the opposition should have challenged them, but this never happened! But then again would the people have accepted it? I doubt it, the last thing people what to hear is bad news.

The ironic thing about bubbles is that more money is often lost just after the pop than before it, as people who missed out rush in to grab their chance and this despite there being clear evidence of the ship is going down! And I believe that is happening today in Ireland, we have lots of people running around trying to get mortgages to buy property, for which there is no really way to judge value, since the market is defunct! Should we do something to stop them and if so what???

Jim.

 

[onq]

Let me ask you this, as someone who works in the building industry what did you do to warn your clients of the impending melt down???

Jim

Had a quite animated discussion with one major client around the time Cowan was toying with raising capital gains tax from 20-40%. It never happened as you may recall.
I strongly suggested to my client that it needed to happen to take the heat out of the system, and that the government needed to seriously look at the whole tax incentives thing or the economy would overheat.
At that stage there was no hint of a world economic crisis and the discussion on his part centred on the collapse of the building boom, but I wanted it a gradually level off - the fabled "soft landing" - and knew that if we didn't face into it voluntarily we would be forced into it sooner or later.
"Quite animated" doesn't begin to describe my client's reaction at the time. Totally against any measures that might impede the year-on-year growth. Had a court judgement for millions against him earlier this year.

Another client bought a site in 2006 for silly money and came to me afterward seeking permission - having not asked my advice before buying. I asked him whether he could sell it again immediately. Not interested in doing that. Owes millions now.

I also tried to warn people about buying second properties. We had looked at a purchase around that time or shortly afterwards and all we could see were bubbles already growing quickly. One year a house a few miles outside Gorey in Wexford was €178K, less than six months later it was €240K. Against a LOT of pressure from someone very influential to me I was pressured into buying. I didn't. Much chagrin followed for several years. That estate is now a forest of "For Sale" and "To Let" signs.

Finally another client came to me with a problem site and asked me to get a permission on it, which I did. Afterward he instructed me to take it to site and between one thing and another, I strongly suggested he sell it instead, even though it would have looked very well in my portfolio of built work. He got out with his shirt and a small profit.

You have to understand that developers are often caught up in their own personhood. They get the bit between their teeth and think they are invincible decision makers.
You're limited to whom you can reach Jim. I did what I could for those I could influence and acted in a fiduciary manner toward them at all times even when they really preferred I just told them the comforting but wrong advice they wanted to hear. Those that listened, benefited from my advice.

 

[The Edge]

If this were Amercia we won't be even having this debate.

Why?

Because most of them would have had at the very least been asset stripped and plenty would be in jail.

This is a common canard but also completely untrue.

Very few American bankers have been jailed in the aftermath of the US financial crisis.

The oft-cited case of Madoff is of no relevance to the broader banking collapse. He was not a banker but a ponzi scheme operator, who pleaded guilty at the first opportunity. His fund would eventually have collapsed regardless of the banking crisis.

 

[The Edge]

The Irish people have suffered due to the banking collapse. This does not justify criminalising the bankers or the politicians.

Good post, Brendan, but in our tabloid witchhunt driven media, unlikely to gain much traction.

I agree with your analysis. A moment's sane consideration will show that the idea that bankers deliberately and fraudulently engineered the crash simply does not make sense. For starters, most of them lost out heavily from a financial point of view by virtue of being heavily invested in their own banks' shares, not to speak of the reputational damage.

When Fitzpatrick points out that he himself has been one of the main losers from the crash, he does not make himself any more popular with the public, but on this occasion, at least, he happens to speaking the unvarnished truth.

 

[Mpsox]

A bank has no duty of care to a customer, .

Not true

Banks have a duty to ensure that they


1 act honestly, fairly and professionally in the best interests of its

customers and the integrity of the market;

2 act with due skill, care and diligence in the best interests of its ​

​

customers;

3 do not recklessly, negligently or deliberately mislead a ​

​

customer as to the real or perceived advantages or disadvantages of any product or service;

This is laid out in the Financial reguulator code of practice 2006​

They also have to ensure that they adhere to the Consumer Credit Act where relevant​

The problem for many customers when applying for loans is that they stupidly/naively waived many of their rights, for example, right to take external legal advice​

​