# Will the LIBOR banking scandal manage to finally force banking reform in the US? **URL:** \ **Category:** Great Debates\ **Created:** [July 5, 2012, 4:51am UTC](https://boards.straightdope.com/t/will-the-libor-banking-scandal-manage-to-finally-force-banking-reform-in-the-us/627270 "2012-07-05T04:51:20Z")\ **Posts on this page:** 8\ **Page:** 3
**Author:** ![Whack-a-Mole](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/whack-a-mole/32/141_2.png) [@Whack-a-Mole](https://boards.straightdope.com/u/Whack-a-Mole)\ **Post date:** [July 9, 2012, 10:06pm UTC](https://boards.straightdope.com/t/will-the-libor-banking-scandal-manage-to-finally-force-banking-reform-in-the-us/627270/41 "2012-07-09T22:06:53Z")
> [@adaher](#): > > Um, wasn’t Dodd-Frank reform? What kind of reforms are you looking for that weren’t already part of Dodd-Frank? Making the SEC actually do its fucking job for starters. The foxes are currently in charge of the hen house. That needs to change. How many people got in trouble for the 2008 economic crisis? ---
**Author:** ![adaher](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@adaher](https://boards.straightdope.com/u/adaher)\ **Post date:** [July 10, 2012, 12:01am UTC](https://boards.straightdope.com/t/will-the-libor-banking-scandal-manage-to-finally-force-banking-reform-in-the-us/627270/42 "2012-07-10T00:01:56Z")
Since financial regulation, like most business regulation, is complex, governments have no choice but to have industry people do the watching. This actually wasn’t too controversial when it first started and we still support the concept for things like medical boards. You don’t hear too many people say that if only doctors weren’t on medical boards, things would be so much better. Likewise, you can’t use poets and beekeepers to regulate the financial industry. So it’s never going to work very well. It just has to work well enough to prevent disaster. As for people getting in trouble, that involves proving individual criminal actions, something that was mostly done by people lower on the totem pole. The government wouldn’t find it very satisfying to make a few thousand Joe Briefcases do a perp walk. ---
**Author:** ![Carmady](https://avatars.discourse-cdn.com/v4/letter/c/f04885/32.png) [@Carmady](https://boards.straightdope.com/u/Carmady)\ **Post date:** [July 10, 2012, 12:40am UTC](https://boards.straightdope.com/t/will-the-libor-banking-scandal-manage-to-finally-force-banking-reform-in-the-us/627270/43 "2012-07-10T00:40:58Z")
Those responsible should have their fortunes mostly stripped away and be forced to live the rest of their lives on only a few hundred million dollars each. ---
**Author:** ![elucidator](https://avatars.discourse-cdn.com/v4/letter/e/8edcca/32.png) [@elucidator](https://boards.straightdope.com/u/elucidator)\ **Post date:** [July 10, 2012, 1:02am UTC](https://boards.straightdope.com/t/will-the-libor-banking-scandal-manage-to-finally-force-banking-reform-in-the-us/627270/44 "2012-07-10T01:02:30Z")
_Pour encourager les autres_, to be sure. Stern, but fair. ---
**Author:** ![adaher](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@adaher](https://boards.straightdope.com/u/adaher)\ **Post date:** [July 10, 2012, 1:04am UTC](https://boards.straightdope.com/t/will-the-libor-banking-scandal-manage-to-finally-force-banking-reform-in-the-us/627270/45 "2012-07-10T01:04:49Z")
But are not the people also responsible? It was said before the 1929 stock crash that when the janitor starts giving you stock tips, it’s time to get out of the market. Likewise, the real estate bubble created a situation where millions of people got greedy and thought they could make easy money, facilitated by loans which they ideally hoped to never even make a single payment on before flipping the house. Bubbles require the active participation of the masses. And once the masses are involved, things take on a momentum all their own. No one wants to be a party pooper and anyone who tries is vilified. And if a recession had come because the banks prudently decided to cut back on lending, who would have been blamed for the recession? The banks. Because no one would know, or even want to know, that they’d prevented something far worse. ---
**Author:** ![Esox\_Lucius](https://avatars.discourse-cdn.com/v4/letter/e/848f3c/32.png) [@Esox\_Lucius](https://boards.straightdope.com/u/Esox_Lucius)\ **Post date:** [July 10, 2012, 4:06am UTC](https://boards.straightdope.com/t/will-the-libor-banking-scandal-manage-to-finally-force-banking-reform-in-the-us/627270/46 "2012-07-10T04:06:29Z")
But consumers, including janitors, get their investment advice from bankers and stock brokers who are trusted to know better, especially since the experience of 1929. That saying should be amended to: “When the janitor starts giving you stock tips, don’t trust stock brokers/bankers anymore and get out of the market”. ---
**Author:** ![adaher](https://avatars.discourse-cdn.com/v4/letter/a/dec6dc/32.png) [@adaher](https://boards.straightdope.com/u/adaher)\ **Post date:** [July 10, 2012, 11:25am UTC](https://boards.straightdope.com/t/will-the-libor-banking-scandal-manage-to-finally-force-banking-reform-in-the-us/627270/47 "2012-07-10T11:25:09Z")
Actually, middle class folks who start trying to make money in the markets tend to get their info from “get rich quick” books. They actually tend to avoid the professionals since professionals charge fees. Now don’t get me wrong, I think middle class and even poor people should save and invest in the markets, but there’s a tried and true way to do this and during a bubble a lot of people forget the rules. They think it’s different this time, they can make big returns and never risk a loss. I remember trying to tell people online and in person tha investing in real estate was getting to be stupid because the only way people could afford it was with special loans. I was assured that since people had to live in houses, values could never drop. So it’s hard for me to hold people blameless. They simply weren’t tricked by the bankers. If anything, the bankers just got infected with the same irrational exuberance everyone else did. And the same thing happened during the 90s stock bubble. IT’s not as if the industry tricked people into investing in overpriced tech stocks. The big institutions were doing it too! Everyone goes nuts during bubbles. ---
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [July 10, 2012, 3:42pm UTC](https://boards.straightdope.com/t/will-the-libor-banking-scandal-manage-to-finally-force-banking-reform-in-the-us/627270/48 "2012-07-10T15:42:49Z")
> [@adaher](#): > > I was assured that since people had to live in houses, values could never drop. So it’s hard for me to hold people blameless. They simply weren’t tricked by the bankers. If anything, the bankers just got infected with the same irrational exuberance everyone else did. And the same thing happened during the 90s stock bubble. IT’s not as if the industry tricked people into investing in overpriced tech stocks. The big institutions were doing it too! Everyone goes nuts during bubbles. Your premise is partly incorrect, but even if correct, your implied conclusion is largely wrong. Home buying in the 2000’s and stock buying in the 1990’s were touted very widely, with magazines, newspapers, bankers, brokers, etc. all united in preaching the message that prices would never fall. People reluctant to buy expensive houses were coaxed into it by brokers. Many of these commentators and brokers were themselves gulled by the bubble’s illusions, but not all. One of the highest rated supply-side analysts on Wall St. became famous for strongly recommending stocks publicly that he was calling “dogs” in e-mails to preferred customers. (I still don’t understand why he wasn’t sent to prison.) Perhaps a large majority of brokers and commentators were as “nuts” as most of the rest of us, but it would be naive to disbelieve that at the very top of the financial food chain, bankers were well aware bubbles burst and were laughing privately at the fortunes snookered from the gullible. So the premise that the common man fell victim to his own greed is incomplete. He had a lot of help; naive homebuyers were strongly urged to buy homes more expensive than they’d intended. But even if your premise were correct, the conclusion is wrong. 49% of the people are below average in intelligence. To blame such average people for being victimized by con men is inhumane. It is precisely because people are imperfect, and because average people are not expected to take a college class in Bubbles and Burstings that regulation is needed. [Previous page](https://boards.straightdope.com/t/will-the-libor-banking-scandal-manage-to-finally-force-banking-reform-in-the-us/627270.md?page=2)