The legislative deficit

realitykeeper

After the economic crash of 2008, precious few individuals were held criminally negligent and almost nobody of any significance was successfully prosecuted for what happened. Apart from incompetence, the main reason for this is because the necessary laws did not exist.

So my question is, should a similar economic crash/banking failure happen tomorrow, are there now robust laws in place to ensure that the individuals responsible are quickly rounded up, charged and successfully prosecuted?

Such laws are likely to deter things like Bertie era overspending and light touch regulation. They would require bankers to adequately guard against potential solvency issues and not just limit their concerns to kinetic market conditions. Such laws would need to be blunt to negate excuses that have blurred of the boundaries of responsibility in the past.

So why is this urgent now, years after the horse has bolted? I believe the problems which caused the 2008 crises have not been resolved by QE and low interest rates but rather exacerbated by these policies.

The disparity between the apparent health of western economies and their true condition will be revealed when the next downturn hits and that will happen rather suddenly. When will that be? By my reckoning, the next recession will hit in the final few weeks of this year and it will be dwarf any other depression in human history.

If I am wrong, then how can it hurt the legislators to legislate for their own criminal negligence should these events happen?

Hunchback

Well, there has been the establishment of the Banking Union which you'd hope would, by means of its Single supervisory Mechanism, be able to detect any potential large scale failings like those at Anglo and use the Resolution mechanism where appropriate

realitykeeper

Hunchback wrote: »

Well, there has been the establishment of the Banking Union which you'd hope would, by means of its Single supervisory Mechanism, be able to detect any potential large scale failings like those at Anglo and use the Resolution mechanism where appropriate

Yes but supervision might fail as so often happened in the past.

Should it fail the next time a crisis hits, consequences need to be in place in order to apply to the legislators, supervisors, bankers etc, whose incompetence and/or negligence results in the failure.

The allocation of responsibility is key here so as to prevent any doubt about who is to blame. "Following orders" should not be an acceptable defense when used by people in senior positions of power. If they choose take the salary, they are responsible.

We are constantly being reassured by legislators, bankers etc that their safeguards are adequate and if that is true, grave consequences for failure should not worry them in the slightest. Therefore, these punitive measures need to be written into law as a matter of urgency.

Consequences inspire integrity, and that is something I feel we need more of in this country.

Graham

realitykeeper wrote: »

After the economic crash of 2008, precious few individuals were held criminally negligent and almost nobody of any significance was successfully prosecuted for what happened. Apart from incompetence, the main reason for this is because the necessary laws did not exist.

Apart from the fact you appear to expect Ireland to be able to legislate against another global financial crash, I'm not entirely convinced new laws here would make a huge difference given the most recent failures were of prosecution rather than leguslation.

realitykeeper

Graham wrote: »

Apart from the fact you appear to expect Ireland to be able to legislate against another global financial crash, I'm not entirely convinced new laws here would make a huge difference given the most recent failures were of prosecution rather than leguslation.

The credit crunch of 2008 did not result in a major crisis in Finland or the Netherlands or Germany so you cannot say a crisis in this country had to happen because of the international credit crunch.

In order to ensure that those in positions of responsibility are deterred from being irresponsible in future, laws must be enacted to punish irresponsible and negligent politicians, central bankers, regulatory overseers and bankers.

Of course, it would be preferable the need for such laws were never to arise but crucially the very existence of these laws would mitigate against the likelihood that they will ever actually have to be applied. The absence of punitive laws raises the probability that Ireland will again be hit hard by the next international economic crisis.

Graham

realitykeeper wrote: »

The credit crunch of 2008 did not result in a major crisis in Finland or the Netherlands or Germany so you cannot say a crisis in this country had to happen because of the international credit crunch.

and you've evidence that this is entirely down to the above countries having punitive laws in place?

realitykeeper wrote: »

In order to ensure that those in positions of responsibility are deterred from being irresponsible in future, laws must be enacted to punish irresponsible and negligent politicians, central bankers, regulatory overseers and bankers.

As I said, prosecutions failed under the laws we already have. I'm not convinced throwing new laws into the pot is the solution.

realitykeeper wrote: »

In order to ensure that those in positions of responsibility are deterred from being irresponsible in future, laws must be enacted to punish irresponsible and negligent politicians, central bankers, regulatory overseers and bankers.

It's very easy to label something 'negligent' after the fact. Prior to the GFC, the public/private sector were largely quite happy benefiting from the 'boom'. Anyone that had tried to curb it by any significant measure would most likely have not survived past the following election.


Sorry but this entire 'punitive measures and consequences against the bankers and the government and the regulators' just comes across a bit too pitch-forky. Maybe you'd some specific legislation in mind....

Samuel T. Cogley

Company law is replete, IMHO, with avenues to pursue against negligent and fraudulent company directors, so I'm not entirely sure the suggestion that the law isn't in place in entirely correct. However, as always I welcome being corrected there. The problem is proving the relevant charges beyond a reasonable doubt and more broadly, sniffling risk taking in business generally. I'm not so convinced by the latter argument; frankly there's plenty more MBAs in the sea.

Cases of this nature in the criminal courts though are pretty novel from what I can gather, that in of itself is usually an issue it seems - syringe legislation as a tenuous example.

Victor

realitykeeper wrote: »

By my reckoning, the next recession will hit in the final few weeks of this year

Why then? I though you previously said November.

realitykeeper wrote: »

I suspect the next crash will hit around November of this year.

it will be dwarf any other depression in human history.

How come?

If I am wrong, then how can it hurt the legislators to legislate for their own criminal negligence should these events happen?

Have you raised these specific issues with politicians? It's not as if they are all in the same party.

Samuel T. Cogley

Just on the how does it hurt point: The legislative agenda is finite. We've plenty of other areas that need the time.

realitykeeper

Graham wrote: »

As I said, prosecutions failed under the laws we already have. I'm not convinced throwing new laws into the pot is the solution.

That is like saying you haven`t finished your cabbage, you`re not getting dessert. I did mention incompetence as a reason why justice was not done but I also recall the required laws to hold politicians criminally negligent did not exist in 2008. They still don`t exist which raises the risk of a repeat performance.

Graham wrote: »

It's very easy to label something 'negligent' after the fact. Prior to the GFC, the public/private sector were largely quite happy benefiting from the 'boom'. Anyone that had tried to curb it by any significant measure would most likely have not survived past the following election.

With a little foresight, it is also easy to label it 'negligent' before the fact. Even if such foresight was beyond the wit of man before 2008, what excuse do we have now? Being irresponsible can feel good I grant you but that does not mean everyone should go around being irresponsible and doing whatever we like. There are consequences to irresponsibility.

realitykeeper

Victor wrote: »

I though you previously said November.

November comes in the final few weeks of the year, I am surprised you did not know that.

wordofwarning

realitykeeper wrote: »

So my question is, should a similar economic crash/banking failure happen tomorrow, are there now robust laws in place to ensure that the individuals responsible are quickly rounded up, charged and successfully prosecuted?

Who cares about preventing a bank going bankrupt, when we have introduced laws to charge people at the top? Who cares that the bank has gone bankrupt requiring a state bailout when the CEO is in jail? :rolleyes:

A bank failure should not happen again. We have introduce Basel III and are now introducing Basel IV. It stops banks from relying on cheap money market funds and forces them to borrow more long term to weather being locked out of funds markets better. They can't be as leveraged as before

Large banks are now stressed by the ECB ie they can't fool the small dumb Central Banks

Irish Banks have now been structured that they can burn the bondholders.

If you look at why American Banks failed during the bust, it was due to them speculating particularly their hedge funds. Their speculative trades now have to be done via separate entities to limit exposure to the main bank ie the Volcker Rule as part of the Dodd-Frank Act

Your question should be how can we ensure Irish Banks are better regulated and structured to weather financial storms. Instead of how can we find someone to blame and charge

realitykeeper wrote: »

Such laws are likely to deter things like Bertie era overspending and light touch regulation. They would require bankers to adequately guard against potential solvency issues and not just limit their concerns to kinetic market conditions. Such laws would need to be blunt to negate excuses that have blurred of the boundaries of responsibility in the past.

Quick question. How would these laws work with Irish Banks with operations in other countries? Or Banks with operations in other countries operating in Ireland?

What regulators have only really realised is that regulations need to international, as with finance it gets murky real quick as to who should be regulating who. Like in the US, were the US regulators supposed to be regulating German banks in US or were German regulators regulating German banks in the US?

realitykeeper

Samuel T. Cogley wrote: »

Just on the how does it hurt point: The legislative agenda is finite. We've plenty of other areas that need the time.

If the law against murder were done away with, the murder rate would probably rise. So putting a law in place against criminal negligence and incompetence would probably see a decline in such behavior.

It is true other areas need time and of course time is money, which reminds me of the 60 billion needed to bail out Anglo. Time taken to set of standards of integrity is worth every minute.

realitykeeper

wordofwarning wrote: »

Who cares ... when we have introduced laws to charge people at the top? Who cares ... when the CEO is in jail? :rolleyes:

The CEO cares.

realitykeeper

wordofwarning wrote: »

Quick question. How would these laws work with Irish Banks with operations in other countries? Or Banks with operations in other countries operating in Ireland?

What regulators have only really realised is that regulations need to international, as with finance it gets murky real quick as to who should be regulating who. Like in the US, were the US regulators supposed to be regulating German banks in US or were German regulators regulating German banks in the US?

The laws would apply to people physically present in the country.

Samuel T. Cogley

realitykeeper wrote: »

If the law against murder were done away with, the murder rate would probably rise. So putting a law in place against criminal negligence and incompetence would probably see a decline in such behavior.

It is true other areas need time and of course time is money, which reminds me of the 60 billion needed to bail out Anglo. Time taken to set of standards of integrity is worth every minute.

But as I said before, such laws exist.

On your second point, as also said such laws need to balance the need of business to take risks.

At the risk of repeating myself, repeating myself again again, another issue is the prosecution of new laws takes time for the establishment to catch up.

New point - these lads have some bloody good lawyers.

realitykeeper

Samuel T. Cogley wrote: »

But as I said before, such laws exist.

I explicitly recall media reports here to the effect that Irish politicians could not be prosecuted for criminal negligence like the Icelandic PM because the required laws did not exist and they still do not exist.

Samuel T. Cogley wrote: »

On your second point, as also said such laws need to balance the need of business to take risks.

By having a penalty for negligence, bankers will police themselves at no cost to the taxpayer. Without consequences, strict regulation is required which is both expensive and highly ineffective. The former financial regulator had a staff of hundreds of highly paid people yet they failed thoroughly. Up until then, every bank advert ended with "regulated by the Irish Banks and Services Regulatory Authority." After the crash the regulator was seen as nothing more than the quango it was and the adverts from then on ended with "Regulated by the Irish Central Bank", which by the way is every bit as useless and incompetent at regulating as the regulator was.

Another massive failure of the banking system is inevitable because punitive measures do not await the perpetrators.

Samuel T. Cogley wrote: »

At the risk of repeating myself, repeating myself again again, another issue is the prosecution of new laws takes time for the establishment to catch up.

New point - these lads have some bloody good lawyers.

The civil service is hardly renowned for its productivity or efficiency, and privatizing the courts would be wonderful in my opinion.

To blunt the beak of the lawyers, I think we need blunt laws. There needs to be a purge of socialist judges. The practice of following a precedent is inherently faulty because every case is different. Besides, didn`t the judges every get rapped on the knuckles for cogging in a test? If so, they evidently failed to learn. Copying somebody else`s work is not the correct way to proceed.

GM228

realitykeeper wrote: »

I explicitly recall media reports here to the effect that Irish politicians could not be prosecuted for criminal negligence like the Icelandic PM because the required laws did not exist and they still do not exist.

He was found guilty of failing to hold a cabinet meeting in relation to the crisis under the offence of misconduct in public office, this is also a common law offence here and has been for 100s of years.

Graham

realitykeeper wrote: »

To blunt the beak of the lawyers, I think we need blunt laws.

Translation?

realitykeeper wrote: »

There needs to be a purge of socialist judges.

I'm not convinced there are a huge number of socialist judges that would fall under this particular political cleansing.

realitykeeper wrote: »

The practice of following a precedent is inherently faulty because every case is different.

The cases may be different, the laws are not.

realitykeeper

GM228 wrote: »

He was found guilty of failing to hold a cabinet meeting in relation to the crisis under the offence of misconduct in public office, this is also a common law offence here and has been for 100s of years.

But his prosecution included other charges which could not be brought against politicians in countries which lack the legislation, like Ireland for example.

realitykeeper

Graham wrote: »

The cases may be different, the laws are not.

I see, so one size fits all. Good luck getting into those speedos.

Graham

realitykeeper wrote: »

I see, so one size fits all. Good luck getting into those speedos.

You'll find there's more than 1 law.

GM228

realitykeeper wrote: »

But his prosecution included other charges which could not be brought against politicians in countries which lack the legislation, like Ireland for example.

The other charges were:-

Malfeasance.

Neglecting to act to reduce the size of the banking system.

Not making sure that national bank Landsbanki's Icesave interest accounts in Britain were transferred to a subsidiary.

Failing to produce better results from the government's 2006 report on financial stability and preparedness.

All can come under the misconduct in office heading.

realitykeeper

Graham wrote: »

You'll find there's more than 1 law.

... yet years after the credit crunch nobody was punished but the taxpayer. The laws that exist are not fit for the purpose of securing convictions against irresponsible politicians and bankers.

realitykeeper

GM228 wrote: »

The other charges were:-

Malfeasance.

Neglecting to act to reduce the size of the banking system.

Not making sure that national bank Landsbanki's Icesave interest accounts in Britain were transferred to a subsidiary.

Failing to produce better results from the government's 2006 report on financial stability and preparedness.

All can come under the misconduct in office heading.

So did the media lie when they said the laws to prosecute politicians did not exist here? The irresponsible political leadership which placed Ireland in a position of insolvency will do so again precisely because the deterrents do not exist. What price has Bertie Ahern paid for his mishandling of the economy? None whatsoever. Consequently, history will repeat.

Graham

realitykeeper wrote: »

... yet years after the credit crunch nobody was punished but the taxpayer. The laws that exist are not fit for the purpose of securing convictions against irresponsible politicians and bankers.

And here we come full circle back to the start of the thread.

People were largely not pursued under the existing legislation. The fix for that probably isn't 'make more laws', rather apply existing laws.

If the DPP stopped pursuing cases of murder, the solution probably wouldn't be new legislation against killing.

ohnonotgmail

realitykeeper wrote: »

I see, so one size fits all. Good luck getting into those speedos.

If the facts are the same the decision should be the same. Its called being consistent.

GM228

realitykeeper wrote: »

So did the media lie when they said the laws to prosecute politicians did not exist here?

Do you believe everything you read in the media?

Misconduct in Public Office is basically a catch all common law offence in Ireland which would cover all you suggest, as others have pointed out the issue isn't lack of laws.

realitykeeper

Graham wrote: »

And here we come full circle back to the start of the thread.

People were largely not pursued under the existing legislation. The fix for that probably isn't 'make more laws', rather apply existing laws.

If the DPP stopped pursuing cases of murder, the solution probably wouldn't be new legislation against killing.

The reason they are not pursued under existing legislation is because existing legislation is not fit for purpose, but I do not think we are going to agree on that. But if I am wrong, what reason do you reckon is preventing the application of existing legislation. Are politics at play? Are senior Gardaí getting backhanders or threatened to prevent them from sending a file to the DPP. Or is the DPP being bribed or threatened? There must be a reason and the one I recall from that time is that the necessary laws do not exist.

realitykeeper

ohnonotgmail wrote: »

If the facts are the same the decision should be the same. Its called being consistent.

I have never heard a barrister outline the facts of a completely different case to a judge. It is always just a reference to another case. Even if he does give the facts of that case, he will only give the facts that he thinks are relevant which is to say, supportive of his client. Truly relevant facts could well omitted.

ohnonotgmail

realitykeeper wrote: »

I have never heard a barrister outline the facts of a completely different case to a judge. It is always just a reference to another case. Even if he does give the facts of that case, he will only give the facts that he thinks are relevant which is to say, supportive of his client. Truly relevant facts could well omitted.

I have no idea what you think your point is or its application to case law.

realitykeeper

GM228 wrote: »

Do you believe everything you read in the media?

Misconduct in Public Office is basically a catch all common law offence in Ireland which would cover all you suggest, as others have pointed out the issue isn't lack of laws.

Ok so what is the issue? Incompetence on the part of the ODCE is not the only problem because they only deal with corporate matters. Politicians also need to be brought to book. Admittedly there was plenty of Misconduct in Public Office, during Bertie Ahern`s tenure in particular and there still is. So if that legislation is enough, why do you reckon it is not applied.

realitykeeper

ohnonotgmail wrote: »

I have no idea what you think your point is or its application to case law.

Like I said, I do not believe a precedent in another case has relevance. Indeed, pointing out a precedent could have a distorting effect in the search for relevant facts.

ohnonotgmail

realitykeeper wrote: »

Like I said, I do not believe a precedent in another case has relevance. Indeed, pointing out a precedent could have a distorting effect in the search for relevant facts.

do you actually understand what a precedent is in law?

realitykeeper

ohnonotgmail wrote: »

do you actually understand what a precedent is in law?

Indeed but do you actually understand the pointlessness of your question as it is structured?