# Could we convict major bank and Wall Street figures?
**URL:** https://boards.straightdope.com/t/could-we-convict-major-bank-and-wall-street-figures/653463
**Category:** Great Debates
**Created:** [March 20, 2013, 4:45pm UTC](https://boards.straightdope.com/t/could-we-convict-major-bank-and-wall-street-figures/653463 "2013-03-20T16:45:14Z")
**Posts on this page:** 20
**Page:** 6
### Author:  [@Bricker](https://boards.straightdope.com/u/Bricker)
#### Post date: [March 22, 2013, 3:03pm UTC](https://boards.straightdope.com/t/could-we-convict-major-bank-and-wall-street-figures/653463/101 "2013-03-22T15:03:13Z")
> [@Linden\_Arden](#):
>
> For the record Citi, Goldman, and Bank of America have settled in dozens of civil cases where alleged MBS misrepresentation was the central issue.
>
> And for many billions of dollars.
Even better evidence that civil liability was at issue.
But of course, not remotely meaningful with respect to criminal liability.
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### Author:  [@deltasigma](https://boards.straightdope.com/u/deltasigma)
#### Post date: [March 22, 2013, 3:05pm UTC](https://boards.straightdope.com/t/could-we-convict-major-bank-and-wall-street-figures/653463/102 "2013-03-22T15:05:06Z")
> [@Martin\_Hyde](#):
>
> You are making claims, not I. If you’d like to explore your claims further I’d like you to advance some information on them aside from the unsupportable trash you’ve mostly put out til now:
>
> 1. What are you saying **should** go into the predictive models.
>
> 2. What responsibility are you imparting on banks that create debt instruments vis-a-vis prospectus statements and other claims.
>
> 3. What are you alleging actually happened here, specifically.
>
> 4. Please explain this simple point: how can you justify saying any type of model, predictive or otherwise, is what “determines the number of defaults.” That is unambiguously absolutely incorrect. Modeling never determines outcomes, if you worded something imprecisely and would like to refine your wording, that is fine.
You have just proved my point. You don’t even understand the concept so you are not worth my time.
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### Author:  [@Martin\_Hyde](https://boards.straightdope.com/u/Martin_Hyde)
#### Post date: [March 22, 2013, 3:06pm UTC](https://boards.straightdope.com/t/could-we-convict-major-bank-and-wall-street-figures/653463/103 "2013-03-22T15:06:35Z")
This is where I find these threads always break down, and I’m highly doubtful any resolution will be forthcoming. One group of people, outraged at behavior they deem to be “bad” assert all kinds of bad behavior and talk of crimes and a weak prosecutorial arm of the government that has failed to prosecute them.
When pushed for evidence none is ever forthcoming, or it is evidence tangential to the original point. I would never have probably even opened this thread if someone had titled it, “Could we say that the major banks and Wall Street figures behaved stupidly prior to the Great Recession?” or “Do you think some of the major banks and Wall Street figures could be sued over behavior prior to the Great Recession?” I specifically came into this thread because of the word **convict**. Everything else that doesn’t discuss criminal law is tangential.
I should state right now, I’m sure of a few things:
1. Some crimes were committed. I know this because some people **were actually prosecuted** and convicted/pled out.
2. Some crimes were committed that were not prosecuted because of insufficient evidence or even because no one ever realized the crime happened.
3. No one has shown me a clear case where evidence is available to the general public that a person involved in this mess committed a crime, and a prosecutor chose not to prosecute.
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### Author:  [@Bricker](https://boards.straightdope.com/u/Bricker)
#### Post date: [March 22, 2013, 3:06pm UTC](https://boards.straightdope.com/t/could-we-convict-major-bank-and-wall-street-figures/653463/104 "2013-03-22T15:06:49Z")
> [@deltasigma](#):
>
> You have just proved my point. You don’t even understand the concept so you are not worth my time.
BWAHAHAHA!
The “dignified retreat,” eh?
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### Author:  [@Martin\_Hyde](https://boards.straightdope.com/u/Martin_Hyde)
#### Post date: [March 22, 2013, 3:07pm UTC](https://boards.straightdope.com/t/could-we-convict-major-bank-and-wall-street-figures/653463/105 "2013-03-22T15:07:46Z")
> [@deltasigma](#):
>
> You have just proved my point. You don’t even understand the concept so you are not worth my time.
This is from the guy who made the claim a model is what determines whether or not underlying loans default.
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### Author:  [@deltasigma](https://boards.straightdope.com/u/deltasigma)
#### Post date: [March 22, 2013, 3:07pm UTC](https://boards.straightdope.com/t/could-we-convict-major-bank-and-wall-street-figures/653463/106 "2013-03-22T15:07:57Z")
> [@Bricker](#):
>
> Oh you did?
>
> Did any of those briefs involve criminal work?
>
> Did any of your criminal cases involve an indictment that failed to identify a specific statute that was alleged to have been violated? I bet the answer is ‘no.’ And I bet from this, you might have reached the understanding that in order to indict someone, or to proceed against them by prosecutor’s information or a similar charging document, it is necessary to identify both the statute that is alleged to have been violated and the specific conduct that is alleged to have violated that statute.
>
> Did that concept ever arise during your appellate practice?
>
> Oh, and when your appellate briefs cited a case, did you provide a article title to some magazine article describing the case?
Yawn.
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### Author:  [@Bricker](https://boards.straightdope.com/u/Bricker)
#### Post date: [March 22, 2013, 3:09pm UTC](https://boards.straightdope.com/t/could-we-convict-major-bank-and-wall-street-figures/653463/107 "2013-03-22T15:09:42Z")
> [@Martin\_Hyde](#):
>
> This is where I find these threads always break down, and I’m highly doubtful any resolution will be forthcoming. One group of people, outraged at behavior they deem to be “bad” assert all kinds of bad behavior and talk of crimes and a weak prosecutorial arm of the government that has failed to prosecute them.
Yes, exactly. And I’m often pilloried for demanding specifics about crimes, only to be told that the posters in question were using the word more abstractly (“Isn’t it a crime that we’re going to lose Saturday mail delivery?”)
Here, there was no ambiguity: “convict” is unquestionably a comment on criminal law.
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### Author:  [@Bricker](https://boards.straightdope.com/u/Bricker)
#### Post date: [March 22, 2013, 3:10pm UTC](https://boards.straightdope.com/t/could-we-convict-major-bank-and-wall-street-figures/653463/108 "2013-03-22T15:10:49Z")
> [@deltasigma](#):
>
> Yawn.
Hilarious that you can be bothered to keep typing, but can’t make any substantive replies.
Probably tired from all those appellate briefs.
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### Author:  [@JohnT](https://boards.straightdope.com/u/JohnT)
#### Post date: [March 22, 2013, 3:12pm UTC](https://boards.straightdope.com/t/could-we-convict-major-bank-and-wall-street-figures/653463/109 "2013-03-22T15:12:23Z")
> [@Bricker](#):
>
> Yes. I haven’t seen anyone in this thread identify a specific crime.
Actually, you have. It was just dismissed as irrelevant because… well, read it.
> [@puddlegum](#):
>
> I read the Big Short too, but one of us missed the point of it. From my reading **the only fraud was committed by the people who applied for the loans and were encouraged by their mortgage brokers to lie on their loan (applications).** Except it was not real fraud because the people that were giving them the loans did not care if the information was true they just wanted loans to be able to sell.
Now, I’m not an attorney nor do I play one on TV, but it seems to me that to “lie on their loan (application)” is fraud, regardless whether you were encouraged to do so or whether the person being defrauded cares or not that they’re being lied to.
If so many people hadn’t lied (either to themselves or to their mortgage broker), then the system would probably not have collapsed. But it’s rather easier to sell the idea that the “little guy” was duped by “greedy executives” than to accept the idea that the “greedy executives” were duped by millions of “little guy” liars who moved into quarter-million dollar houses on $40k/year salaries.
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### Author:  [@deltasigma](https://boards.straightdope.com/u/deltasigma)
#### Post date: [March 22, 2013, 3:14pm UTC](https://boards.straightdope.com/t/could-we-convict-major-bank-and-wall-street-figures/653463/110 "2013-03-22T15:14:47Z")
> [@Bricker](#):
>
> Hilarious that you can be bothered to keep typing, but can’t make any substantive replies.
>
> Probably tired from all those appellate briefs.
No, that was a few decades ago. I just think that your insistence on a sharp delineation between criminal and civil violations is amusing. If you had any familiarity with what happened AT ALL - which you so obviously don’t - you would realize that it’s not as bright a line as you would like to believe.
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### Author:  [@Linden\_Arden](https://boards.straightdope.com/u/Linden_Arden)
#### Post date: [March 22, 2013, 3:14pm UTC](https://boards.straightdope.com/t/could-we-convict-major-bank-and-wall-street-figures/653463/111 "2013-03-22T15:14:59Z")
> [@Martin\_Hyde](#):
>
> If that’s true (and I have no idea if it is, but it never hurts to cite stuff when you’re making positive claims), it has nothing to do with where this discussion started: that the MBS market was full of criminals who have evaded prosecution despite clear evidence they committed crimes.
I fully agree. I am solidly in the “no actual crimes were committed” camp.
Contract law is a different matter.
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### Author:  [@deltasigma](https://boards.straightdope.com/u/deltasigma)
#### Post date: [March 22, 2013, 3:19pm UTC](https://boards.straightdope.com/t/could-we-convict-major-bank-and-wall-street-figures/653463/112 "2013-03-22T15:19:36Z")
> [@Martin\_Hyde](#):
>
> This is from the guy who made the claim a model is what determines whether or not underlying loans default.
What I said was, the model is only as good as the information that goes into it. Garbage in, garbage out.
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### Author:  [@Martin\_Hyde](https://boards.straightdope.com/u/Martin_Hyde)
#### Post date: [March 22, 2013, 3:21pm UTC](https://boards.straightdope.com/t/could-we-convict-major-bank-and-wall-street-figures/653463/113 "2013-03-22T15:21:40Z")
**JohnT** I do think many of the crimes committed were by borrowers who lied on their mortgage application (something it clearly says in black and white is a criminal act by the way, so there is no excuse for it.) By and large I do think people should be prosecuted to dissuade that kind of thing, but I think a lot of times it’s hard to differentiate between “I lied because I really wanted the home and knew if I didn’t my mortgage application would be rejected” and “I was confused because my eyes glaze over at the sight of paperwork and accidentally noted that a $10,000 gift from my parents was income and didn’t note that it was a gift from an external source” and things like that.
It’s hard from a PR perspective to prosecute “ordinary Americans” when those are both distinct and real possibilities.
But it is fair to say those are irrelevant, since the thread wanted to discuss “major bank and Wall Street figures” which means specifically not middle class borrowers who filled out mortgage applications for homes in middle class neighborhoods.
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### Author:  [@newcomer](https://boards.straightdope.com/u/newcomer)
#### Post date: [March 22, 2013, 3:25pm UTC](https://boards.straightdope.com/t/could-we-convict-major-bank-and-wall-street-figures/653463/114 "2013-03-22T15:25:51Z")
> [@Martin\_Hyde](#):
>
> 1. No one has shown me a clear case where evidence is available to the general public that a person involved in this mess committed a crime, and a prosecutor chose not to prosecute.
Lehman Brothers.
First you had - [http://www.thenational.ae/business/banking/lehman-executives-may-face-criminal-charges](http://www.thenational.ae/business/banking/lehman-executives-may-face-criminal-charges). Everything laid out perfectly smooth in Anton Valukas initial report and then suddenly - [SEC Dropping Lehman Case: Where’s the Outrage?](http://finance.yahoo.com/blogs/daily-ticker/sec-dropping-lehman-case-where-outrage-175140685.html)
Yeah, I know, they really _could not_ prove it.
But, then again, perhaps US Treasury and SEC are both corrupted? Just maybe, one in a trillion chance that people running these are… simply CORRUPT? No? Infallible, huh?
But this is now really tiring - it is lawyers saying “show me evidence”.
You show it, they “read” and then declare: We’re not convinced!
Okay… whatever, dude.
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### Author:  [@Bricker](https://boards.straightdope.com/u/Bricker)
#### Post date: [March 22, 2013, 3:27pm UTC](https://boards.straightdope.com/t/could-we-convict-major-bank-and-wall-street-figures/653463/115 "2013-03-22T15:27:07Z")
> [@JohnT](#):
>
> Actually, you have. It was just dismissed as irrelevant because… well, read it.
>
> Now, I’m not an attorney nor do I play one on TV, but it seems to me that to “lie on their loan (application)” is fraud, regardless whether you were encouraged to do so or whether the person being defrauded cares or not that they’re being lied to.
>
> If so many people hadn’t lied (either to themselves or to their mortgage broker), then the system would probably not have collapsed. But it’s rather easier to sell the idea that the “little guy” was duped by “greedy executives” than to accept the idea that the “greedy executives” were duped by millions of “little guy” liars who moved into quarter-million dollar houses on $40k/year salaries.
Extremely valid point.
Let’s show **deltasigma** how it’s done:
The “little guy” who claims an income he doesn’t have, or gets a loan from a family member which he represents as his own assets in order to qualify for a mortgage has broken the law.
What law?
Why, 18 USC § 1014, of course. It provides, _in pari materia_:
> [@](#):
>
> Whoever knowingly makes any false statement or report, or willfully overvalues any land, property or security, for the purpose of influencing in any way the action of . . . any Federal home loan bank. . . .or a mortgage lending business . . . . shall be fined not more than $1,000,000 or imprisoned not more than 30 years, or both.
Sure enough, that’s a crime.
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### Author:  [@deltasigma](https://boards.straightdope.com/u/deltasigma)
#### Post date: [March 22, 2013, 3:29pm UTC](https://boards.straightdope.com/t/could-we-convict-major-bank-and-wall-street-figures/653463/116 "2013-03-22T15:29:02Z")
Bravo!
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### Author:  [@Bricker](https://boards.straightdope.com/u/Bricker)
#### Post date: [March 22, 2013, 3:29pm UTC](https://boards.straightdope.com/t/could-we-convict-major-bank-and-wall-street-figures/653463/117 "2013-03-22T15:29:04Z")
> [@newcomer](#):
>
> Lehman Brothers.
>
> First you had - [http://www.thenational.ae/business/banking/lehman-executives-may-face-criminal-charges](http://www.thenational.ae/business/banking/lehman-executives-may-face-criminal-charges). Everything laid out perfectly smooth in Anton Valukas initial report and then suddenly - [SEC Dropping Lehman Case: Where’s the Outrage?](http://finance.yahoo.com/blogs/daily-ticker/sec-dropping-lehman-case-where-outrage-175140685.html)
>
> Yeah, I know, they really _could not_ prove it.
>
> But, then again, perhaps US Treasury and SEC are both corrupted? Just maybe, one in a trillion chance that people running these are… simply CORRUPT? No? Infallible, huh?
>
> But this is now really tiring - it is lawyers saying “show me evidence”.
> You show it, they “read” and then declare: We’re not convinced!
>
> Okay… whatever, dude.
From your own link:
> [@](#):
>
> But a criminal case can be difficult to prosecute, as intent must be proven.
Why is that so difficult to accept?
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### Author:  [@Bricker](https://boards.straightdope.com/u/Bricker)
#### Post date: [March 22, 2013, 3:30pm UTC](https://boards.straightdope.com/t/could-we-convict-major-bank-and-wall-street-figures/653463/118 "2013-03-22T15:30:27Z")
> [@deltasigma](#):
>
> Bravo!
Nothing at all, especially, I imagine, to someone with Supreme Court briefs on his resume.
BWAHAHAHAHA.
Hey, I just heard that a prosecutor in Ohio is indicting Punxsutawney Phil for fraud in predicting an early spring.
That’s not your day job, is it?
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### Author:  [@deltasigma](https://boards.straightdope.com/u/deltasigma)
#### Post date: [March 22, 2013, 3:32pm UTC](https://boards.straightdope.com/t/could-we-convict-major-bank-and-wall-street-figures/653463/119 "2013-03-22T15:32:33Z")
> [@Bricker](#):
>
> Nothing at all, especially, I imagine, to someone with Supreme Court briefs on his resume.
>
> BWAHAHAHAHA.
Those were a bit more complex than just citing a statute but then I was a bit more motivated. 😛
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### Author:  [@newcomer](https://boards.straightdope.com/u/newcomer)
#### Post date: [March 22, 2013, 3:33pm UTC](https://boards.straightdope.com/t/could-we-convict-major-bank-and-wall-street-figures/653463/120 "2013-03-22T15:33:12Z")
> [@Martin\_Hyde](#):
>
> This is from the guy who made the claim a model is what determines whether or not underlying loans default.
I understand you may have some lawyer background but this, how is risk of any kind (credit, market, liquidity, operational etc.) determined for any financial arrangement, he is, in fact, correct.
For example, under Basel II Risk Weighted Asset calculation, there’s a parameter called Probability of Default that is based on a predictive model over a horizon of one year if counterparty would default.
However, for MBS, the credit risk model is based individual mortgage holder credit score (and other parameters such as Prepayment factor) that is still subjected to predictive model (predictive as in future behaviour based on historical data).
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