General Question

Sandydog's avatar

Should we throw all bankers and hedge funders and venture capitalists into prison?

Asked by Sandydog (1263points) October 7th, 2010 from iPhone

Why should millions of ordinary people have their lives ruined because of the activities of these parasites who produce nothing yet live like kings?

Observing members: 0 Composing members: 0

36 Answers

RareDenver's avatar

I can’t believe this is even being asked. Throw someone in prison for breaking the law, not doing their job.

marinelife's avatar

No, not if they are not breaking any laws. But perhaps we need new financial regulations.

roundsquare's avatar

If you are unhappy with what happened, the law should be changed, you can’t just throw people into jail.

mrlaconic's avatar

Should we… YES!

Can we? No we can’t until we overturn the federal reserve act.. so as shady as it is what they do…. it’s legal. How do we overturn the federal reserve act? Other then outright buying an island and starting your own nation you can’t because we can’t over turn the federal reserve act because of what section 31 says link

wundayatta's avatar

They produce something. Something of enormous importance: capital. Yes, because they control so much capital they have a lot of power, and if they make a mistake, a lot of people are hurt. Although you can’t put the entire blame for a slow economy on their shoulders.

The alternative is to have government decide where capital should go. That kind of system has been shown to reduce efficiency and bring production to a near halt, and to slow the economy so much that everyone does nothing but spend time standing in lines.

@mrlaconic What, pray tell, is the problem with the Federal Reserve Act?

mrlaconic's avatar

@wundayatta I didn’t say I had a problem with the federal reserve act I am only pointing out that what the bankers do is legal because of the federal reserve act.

Response moderated (Unhelpful)
pr1076's avatar

Some of them certainly deserve jail time, maybe much worse, but without that industry our country would crash and we would be in a third world economy. Important to keep that in mind…

josie's avatar

Then we can use YOUR money to discover new innovations and fabulous inventions and back up new businesses that might higher people someday. What do you think “venture capital” is?

MeinTeil's avatar

Are you going to pay for their incarceration?

Sandydog's avatar

interesting site commenting on the banking system – you dont need to be a “bible believer” to make sense of what theyre saying

Cruiser's avatar

These parasites as you refer to them are what keeps the wheels of our economy turning and your paychecks cashable. If you have any problem with what they do and how they do it you need to look at who you vote for. The policy makers tell them what they can and cannot do and the voters tell the policy makers they want low interest no money down loans and high balance credit cards regardless of ability to pay…so who are you really going to blame.

CyanoticWasp's avatar

Blame those who gave them the money from the Treasury. “The worst economic collapse since the Great Depression” was made worse by the stimulus and recovery programs which attempt to deny that we (still) have serious flaws in our economy. If we had taken the hit and allowed the banks to bust we would be a year and a half into an actual Recovery by now.

Instead, we probably still haven’t hit bottom. Watch what happens after the election if you don’t believe me.

camertron's avatar

@Cruiser is absolutely right. You might not like it, but the people who take risks are the people who drive economic growth. Also, Fluther itself is funded largely by venture capitalists. Without them, there would be no Fluther, no Facebook, no Google, and no Amazon. Is that what you want?

weeveeship's avatar

No, they play a valuable role in our society, providing liquidity for businesses (both big and small). After all, where would all of our fancy gadgets be if some venture capitalist had not supported the research of the technology years ago.

Now, if they are being fraudulent, then by all means, they should go to jail.

lloydbird's avatar

To answer your fist question, I would say no “we” shouldn’t.
They should, perhaps, just be denied the ability to do so.
To answer your second question, I would say they shouldn’t.
Good question and good link.
Don’t be put off by the bleating here.

YARNLADY's avatar

@Sandydog I take it you don’t own a house or a car or use a site like Fluther – which is supported by venture capital.

Only people who have actually committed a crime should be put in jail. What’s really at stake here is that too many people are not aware of how finance really works, and that’s how fraud takes place.

mrmijunte's avatar

Of course! What they did was fraud. For the people that posted that didn’t break the law, yes they did. It is fraud when you know that your bank owns toxic mortgages, the turn around and say to investors they are a-ok. And to top it off, when they sold the derivatives they bet against them. That is fraud people, stay informed. Now there are no charges brought forward by the bought government, and worse, no real regulation. U.S.A. is going for another recession in the near future because of this. Now, not everyone was involved to be clear, but there are many that did it like Paulson. So, to conclude, the ones that defraud, deserve to be in jail.

DominicX's avatar


Of course the ones that defraud should be in jail, but fraud is against the law and they should be in jail either way (it becomes difficult to apprehend these people for the crime of fraud, however).

I don’t think that’s what the OP is saying, though, the OP is implying that the very practice of banking, hedge funding, and venture capital is harmful and fraudulent by its very nature and every. single. one. of them (including people like my dad) should be thrown in prison. That’s very different from saying that ones that commit fraud should be jailed (which they should).

Additionally, saying that these people “contribute nothing” shows a serious lack of understanding about what these people actually do.

ETpro's avatar

Certainly not! If any have broken laws, then prosecute them to the full extent of the law. But most of the wild gambling that caused the Great Recession of 2007–2009 had been made perfectly legal by the recent craze for deregulation and free-market economy.

We made a huge mistake back in 1999 when we passed the Gramm-Leach-Bliley Act gutting the protections against banking abuses which were put in place in 1933 by the Glass-Steagall Act. The Obama Administration pushed through improvements to financial regulations, but they didn’t go far enough. The stage is still set for another round of Casino Capitalism and forced taxpayer bailouts. The financial institutions have been allowed to stay too big to fail. The derivatives market that mushroomed to $62 billion incredibly leveraged dollars per year and really precipitated the crash has been left to repeat. We should fix all that.

But no matter how angry the loss of houses and savings makes us, we should never throw folks in jail for doing things that were perfectly legal when they did them.

incendiary_dan's avatar

So if something is legal it’s okay? C’mon people!

I still say no, though. It’s fairly well established that prison doesn’t regularly work as a successful way to reform prisoners, and tends to just teach them better how to be criminals. Don’t make them any better at what they’re doing!

mrmijunte's avatar

@DominicX Well of course that we need banking, hedge funding and venture capital, but like you said, I was referring to the ones that did do the fraudulent activities, which are most of the top executives, maybe they didn’t do it personally, but they were aware of the activities, and that is still breaking the law.
@ETpro You are so right by bringing up the mass disaster when Glass-Steagall Act was destroyed, that was mental, and of course that only benefits the executives of the big banks, and politicians that fought to repeal it, republicans and sadly, democrats alike.
Another problem I see is public-private companies that privatize the earnings, but resort to tax payer dollars when they mess up like merryl linch.
I still think there was fraud involved, when you knowingly package mortgages that are toxic and then sell them saying they are fantastic. There is nothing in the law that says that is legal.

roundsquare's avatar

@incendiary_dan No. There’s two separate points:
1) If something is legal, even though its wrong, we shouldn’t throw people in jail for doing it. There’s a fairly basic slippery slope argument for this.
2) While some of them have done bad things, many of them haven’t, at least not consciously. Many of them, in fact, do good things. I think its fairly clear, for example, that venture capitalists are important. They take risks on what might be a great idea. Its a great way to spur innovation.

ETpro's avatar

@incendiary_dan I assume since your comment is directly below mine that it’s directed to me. If so, then let me point out that you are putting words in my mouth. I did not say, nor do I think that what the Wall Street weasels did was OK. I think it was greed run amok and as vile as murder for hire. I just said you can’t put them in jail for it when we were stupid enough to vote for people who made it all legal. And unless trends change soon, it looks like We the People may be stupid enough to go right back to the polls and put the billionaire their enablers back in charge so they can do it all again. Hey, they promised us they will cut taxes and that will magically balance the budget and make the massive federal debt disappear overnight. There’s blame to go around between Republicans and Democrats. But truth told, most of the blame lies with voters who care far more about who gets kicked off of American Idol and Dancing with the Stars then who runs the nation, and for whose benefit they run it.

@mrmijunte How true. The hedge fund managers and investment bankers were taking home billion dollar annual bonuses. The top hedge fund manager got a bonus of $5 billion on top of his astronomical salary. They gave none of that back, but got billions to bail them out when their ultra-leveraged derivatives finally collapsed. Those guys were not, like most voters, too lazy to figure out what direction is up. They knew exactly what they were doing, and what it was going to cause. The smart ones managed their portfolios so when the crash they produced happened, they had a fat checkbook pumped full of cash to buy up all the foreclosed properties and businesses they bankrupted at fire-sale prices. Keep voting for Profit before People and that’s what you will continue to get. And the robbery will all be made legal by the moneyed interests that pay to get their water carriers elected to make it so.

@roundsquare I did not mean to impugn venture capitalists or even all bankers in my rant. I’m talking about the weasels that worked the system after they basically bought it with fat checks to get their water carriers into Congress and the White House.

roundsquare's avatar

@ETpro I was just responding to @incendiary_dan. Sorry for the confusion.

incendiary_dan's avatar

@ETpro You assumed wrong. You know what they say about making assumptions. :P

No, I wasn’t directing it at you.

basstrom188's avatar

Prison is too good for them, put them up against the wall and shoot them

mattbrowne's avatar

Greed and the danger related to greed is an ancient well-known problem. The ancient Greek wrote about it and it’s also an important issue in the Bible.

In recent history of humankind for the last 500 years banking was as important for progress as was science and technology. The problem began with the creation of speculative bubbles, because greed all of a sudden had a very powerful boosting mechanism. These bubbles have existed for hundreds of years. The invention of derivatives and especially credit derivatives turned this booster into a three-stage rocket for which even the sky wasn’t the limit.

Investment banking can be a good thing. How can we build Desertec in the Sahara replacing fossil fuels with solar power for the whole of Europe? Not by shooting all the bankers. Venture capitalism can be a good thing too. How else could Google have bought there first farm of servers to index the web and allow fast searches with relevance ranking. How else can new ideas that require capital have a chance?

The problem is banking for the sake of banking. Leverage can become a dangerous thing. It makes greedy people more greedy. This is what happened at Lehman Brothers. Therefore we need moral and ethics, but also better regulation world-wide including all the off-shore havens. There’s a lot of good research, see for example

I can recommend his book.

ETpro's avatar

@roundsquare & @incendiary_dan Sorry for the confusion about who you were addressing. Thanks for clarifying.

roundsquare's avatar

@basstrom188 I assume you are joking.

@mattbrowne GA. I’d just add that another part of the problem is people fooling themselves into not thinking there is a problem. I know its hindsight, but looking back, its hard to imagine that no one realized that “subprime mortgages” really means “giving mortgages to people who shouldn’t get them.”

ETpro's avatar

@roundsquare Actually, sub-prime mortgages were just the tip of the iceberg. It took a whole iceberg to sink the Titanic. The poor are just a convenient whipping boy to use as a scapegoat so we can let the real culprits off the hook. Here’s why I say that.

Only 15% of the mortgages that defaulted were sub-prime. Predatory lenders actually bamboozled lots of sub-prime borrowers into mortgages the lenders knew very well were going to fail. They then bundled those mortgages and created leveraged derivatives. Here’s how the profit motive worked out. Fannie Mae and Freddie Mack together held a total portfolio of $2 trillion in mortgage debt. Not all of that was sub-prime, and not all of what was sub-prime defaulted. The derivatives market in total hit an annual $62 trillion in the USA. Because the derivatives were so incredibly leveraged, when sub-primes began to default, it took the house of cards right down. But the problem was never sub-prime lending, it was a house of cards. And they are right back to building that house of cards again.

YARNLADY's avatar

@roundsquare I agree with @ETpro here about the real cause, but let me just add that many lenders did see what was happening, and they left the industry in droves, rather than try to go against the trend. The salesman who sold us our last car was one such man.

One indicator that I saw was the number of ads for loan processors with “no experience necessary”. That is a very telling trend.

roundsquare's avatar

@ETpro True enough. I was just using sub-prime mortgages as an example. My main point is that a lot of people who should have known better thought that things would continue to be good. Other examples would be that people thought the business cycle had been eliminated and their over belief in their models.

@YARNLADY I hadn’t actually realized a lot of lenders had left the industry. I guess people without experience don’t ask annoying question.

ETpro's avatar

@roundsquare There is no question that even some real estate brokers and mortgage originators let themselves fall for the seductive lie that things would keep going up forever. THe proof is they got caught over their heads and lost their own homes and fortunes.

mattbrowne's avatar

@roundsquare – I think the following book is an eye opener:

“We get a close-up view of the participants in the Lehman collapse, especially those who saw it coming with a helpless, angry certainty. We meet the Brahmins at the top, whose reckless, pedal-to-the-floor addiction to growth finally demolished the nation’s oldest investment bank. The Wall Street we encounter here is a ruthless place, where brilliance, arrogance, ambition, greed, capacity for relentless toil, and other human traits combine in a potent mix that sometimes fuels prosperity but occasionally destroys it.”

lloydbird's avatar

@mattbrowne Some suspect that it was more a wilful deceit than any ”..failure of common sense..”.

Oft repeated.

But increasingly transparent.

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