There Oughta Be A Law!

[xthread]

In another venue, someone argued 'the people who caused the mortgage meltdown be in jail?!'

I don't know if any of you, dear readers, happen to hold that view, but, if you do, would you be so kind as to tell me, in general terms, who you think ought to be in jail, and in specific terms, what you think they should be in jail for?

Let me note two important things at the outset: remember that lying to people is usually only against the law if you're doing so to cheat them out of money (which is why Bernie Madoff is in jail), and it's unconstitutional to make laws that make something retroactively illegal.

Got your moral outrage ready? Go!

Comments

[xthread.livejournal.com]

Rafts and rafts of dodgy. The very occasionally actually illegal, but almost exclusively an extremely careful parsing of 'what are we required by law to disclose?' There are a bunch of known cases of a buyer pushing specific groups of mortgages together into the same collateralized bond so that they could short against the bond, but that's legal so long as you tell everyone that you're doing it and so long as you don't disguise your own interest in the holdings.

There is at least one significant case where a firm directed Goldman to assemble a very specific set of securities together into a synthetic fund and then offer that bundle for sale without revealing that the firm had directed what mortgages were going to be bundled together, and those people are having some very uncomfortable conversations with the New York State financial crimes folks right now. But that sort of thing was.. unusually egregious.