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Thread: HSBC facing charges from Atlanta communities over predatory lending

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  1. #1
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    Default HSBC facing charges from Atlanta communities over predatory lending

    British bank HSBC --- formerly convicted of funding foreign terrorist groups in violation of the Trading With The Enemy Act, as well as taking in billions from laundering money for drug lords, and yet "punished" with a fine that amounted to only about 7 weeks' profit for the bank, a mere percentage of the profits they made from their illegal ventures --- is now being sued by three Atlanta counties over similar accusations:

    Three Atlanta-area counties have filed a lawsuit claiming that British bank HSBC cost them hundreds of millions of dollars in extra expenses and damage to their tax bases by aggressively signing minorities to housing loans that were likely to fail.

    The Georgia counties’ failure or success with the relatively novel strategy could help determine whether other local governments try to hold big banks accountable for losses in tax revenue based on what they claim are discriminatory or predatory lending practices. Similar lawsuits resulted in settlements this year worth millions of dollars for communities in Maryland and Tennessee.

    Fulton, DeKalb and Cobb counties say in their lawsuit, which was filed in October, that the housing foreclosure crisis was the “foreseeable and inevitable result” of big banks, such as HSBC and its American subsidiaries, aggressively pushing irresponsible loans or loans that were destined to fail. The counties say that crisis has caused them tremendous damage.

    “It’s not only the personal damage that was done to people in our communities,” said DeKalb County Commissioner Jeff Rader. “That has a ripple effect on our tax digest and the demand for public services in these areas.”

    The city of Atlanta straddles Fulton and DeKalb counties, while Cobb County is northwest of the city.

    The lawsuit says the banks violated the Fair Housing Act, which provides protections against housing or renting policies or practices, including lending, that discriminate on the basis race, color, national origin, religion, sex, family status or handicap.
    This seems like a case to watch. Depending on the outcome of this case, it could set a precedent for future prosecutions of banks for illegal/predatory lending practices. I'm interested to see how the charges pan out; it'd be nice to see some of these bigger banks face stricter penalties, although if history is any indication, they will most likely only face minor civil penalties. It's hard to punish a bank with a dollar amount, since they make so goddamn much money anyway.

    But of course, this isn't the first time something like this has happened. Back in 2009, Baltimore officials sued Wells-Fargo for making predatory loans to blacks and Latinos; calling them "mud people," and calling said predatory loans "ghetto loans:"

    Wells Fargo, Ms. Jacobson said in an interview, saw the black community as fertile ground for subprime mortgages, as working-class blacks were hungry to be a part of the nation’s home-owning mania. Loan officers, she said, pushed customers who could have qualified for prime loans into subprime mortgages. Another loan officer stated in an affidavit filed last week that employees had referred to blacks as “mud people” and to subprime lending as “ghetto loans.”

    “We just went right after them,” said Ms. Jacobson, who is white and said she was once the bank’s top-producing subprime loan officer nationally. “Wells Fargo mortgage had an emerging-markets unit that specifically targeted black churches, because it figured church leaders had a lot of influence and could convince congregants to take out subprime loans.”
    Neither time was a coincidence, or methodological failure; both were deliberate, conscious efforts to make money at the expense of minority communities. Tell me again how humanity is "enlightened" and there's no institutionalized racism in America? Or how capitalism always works itself out and the profit motive always guarantees purely ethical actions? lol.
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  2. #2
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    Wow. You do not like HSBC do you?
    Big banks will be big banks.
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    Wow. You do not like HSBC do you?
    Not terribly fond of international corporations who violate federal trade laws that would plant a normal citizen in prison for life, and yet actually make money off of it as if it were no more than an investment, no.

    Big banks will be big banks.
    And murderers will be murderers, and rapists will be rapists. Guess we should just let all of them off the hook as well?
    "I'm sorry
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    Wow. Not only are you not a fan of HSBC, but you're a little angry too.
    Let me tackle your second response to me. When I said, "Big banks will be big banks," what I mean is that I'm not surprised. I hope that in these courts, whoever is guilty ends up punished. I will not take sides in this because it is not for me to judge on. When the ruling is given or a settlement is reached, then I will judge. Big banks will be big banks, murderers will be murderers, rapists will be rapists, and trolls will be trolls. Each should be dealt with in a fair, calm manner.
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    Wow. Not only are you not a fan of HSBC, but you're a little angry too.
    Not angry, just sticking to the point. Though I would be justified if I were angry.

    Let me tackle your second response to me. When I said, "Big banks will be big banks," what I mean is that I'm not surprised. I hope that in these courts, whoever is guilty ends up punished. I will not take sides in this because it is not for me to judge on. When the ruling is given or a settlement is reached, then I will judge. Big banks will be big banks, murderers will be murderers, rapists will be rapists, and trolls will be trolls. Each should be dealt with in a fair, calm manner.
    I agree. Each should be dealt with in a fair, calm manner. That's what the justice system is supposed to do. However. There is indisputable evidence that HSBC's main executives were not just aware of, but involved in, the proceedings of these illegal actions. They have been convicted, and a judgment has been handed down from the Department of Justice --- they are guilty. That's not in question, and so there's no excuse for that. What's in question is:

    (A) the effectiveness of their "punishment" --- a fine that amounts to approximately seven weeks' standard profit for the organizations. Considering they made many times that in profits from their illegal proceedings, a clear incentive is provided here, whether the DoJ intends to provide it or not: the message is that, if you perform grossly illegal felony offenses, and you make enough money off of those offenses, then you can pay a fine (which is only a small percentage of your illegal earnings) and keep the rest of the money you earned illegally. It's like, if I steal $500 from my neighbor, and the government tries me, convicts me and charges me a fine of $50. I still make $450 off the whole situation, and so I have no incentive to not do it again, so long as I make more than $50 doing so.

    (B) The reasoning behind their lenient punishment after their conviction for violating the TwtEA was (literally) that they are too central to the economy to punish, meaning that the DoJ feared the banking industry would collapse if a major bank were to be prosecuted criminally. This also sends a troublesome message, and it's one the DoJ is significantly less likely to not be aware of: that, if you drive the economy hard enough, you can literally commit whatever crime you please, and nobody will stop you.

    The DoJ even sent HSBC a cease-and-desist letter before they were originally charged, saying they wouldn't charge them criminally so long as they ceased illegal action and took steps to prevent it from happening again. Which they agreed to. Then they violated that agreement and broke the TwtEA, and their punishment? A small fine, an apology, and a promise that they'll never do it again. In other words, no incentive whatsoever for them to change their business model to a legal one. In the long run, they haven't lost any money, and they haven't served any jail time. And they won't. That is the issue.
    "I'm sorry
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    I agree with your little analogy. Made sense to me. But what exactly do you suggest we do about it? Stategic lynchings of DoJ people? Strategic lynchings of HSBC people? Post a thread here, a tweet there, and hope that both sides read it and have an "aha!" moment? The only thing that we can do here, in my opinion, is to boycott HSBC. But considering their immense wealth, I would say that the difference would be minimal to them.

    Then again, power to the people, right? Before Obama bans guns from us, maybe we should turn our MP7 scopes against these bankers. I mean, what the hell? We're damned if we do and damned if we don't. As many a punk band once said, "Rise up!"
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    Quote Originally Posted by Godxilla View Post
    French people pay 75%.
    Funny. French people pay 75% in taxes. All French people? Which French people? How many French people? Answer: French people who earn more than $1,280,000. That's very few. The vast majority of French people pay between 5% and 30%. Nice massive exaggeration...
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  8. #8
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    That was a lot. I'll focus on 3 things: the "influx of seniors", the clean slates, and the fiscal cliff.
    For the seniors: I would like to make it clear that I will not be absolving the USA and redoing it. I am discussing the nation that would hypothetically leave the USA. Let us say that the USG consists of all the "Bible Belt" states. For these seniors, each state would set us its own safety net. The net would match social security payments in the USA, but for all new recipients, the amount would be half. This would promote a culture of saving for retirement. People would have no choice. Eventually, this benefit would cut down to essentially an award for surviving to their age.
    For the clean slates: big banks cannot violate laws, bribe people, or perform unethical behavior for a while, because while the US government was okay with it, the USG may or may not be okay with it. This will create a clean slate for all companies, because the USG does not yet have the laws or customs that businesses follow yet.
    For the debts: if we break away, I think it is pretty obvious that people will not expect us to take on the debts of the USA. After all, both nations still exist. So the USA can pay off its debt and we can pay off ours. For those in our nation, the fiscal cliff is over. The USA is fucked, but seriously, we don't care. All our debts will be war debts because at this early point, we will have been nothing more than a government which has only been a rebellion. It did not pay anything besides the cost of war. It will soon, but not now.
    We will start by debating these three points. If we are clear on them, then we can move on to the next points.
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    For the seniors: I would like to make it clear that I will not be absolving the USA and redoing it. I am discussing the nation that would hypothetically leave the USA. The net would match social security payments in the USA, but for all new recipients, the amount would be half. This would promote a culture of saving for retirement. People would have no choice. Eventually, this benefit would cut down to essentially an award for surviving to their age.
    So you would revoke Social Security as a safety net for the elderly, and instead force them to save for retirement on their own, on basically the threat of death? Okay, so:

    (1) Your model fails to take inflation into account. If a person spends 40+ years (for example) saving money, and during that time the value of the dollar decreases, that person will have less money. So unless they plan for an impossible-to-foresee amount of economic uncertainty, there is a real risk that a person saving for retirement may accidentally undershoot the amount necessary to survive off of.

    (2) Your model assumes the same degree of systemization to personally saving for retirement as is present in Social Security. SS was designed by people who did the math, studied inflation, figured out how to calculate when to raise the benefits of SS to account for inflation (and how to raise the revenue to offset those increases), and so SS runs flawlessly based on those calculations (because they are a way of exploiting simple mathematical trends). By having an agreed-upon retirement age established by departments with access to far vaster resources than the individual, we establish a couple of things: (a) when a person should expect to be able to retire; (b) how much a person needs to be able to save from each paycheck; (c) adjustment for economic changes in the intervening years.

    Given the prevalence of economic uncertainty that creates these investment problems in the first place, it's just plain unfair to expect one individual to be able to predict the future to such an extent that they can accurately plan out a retirement to the extent as planned by SS. I'm sure some people with a firm understanding of economics can do it, but the point is that our system prevents people from falling through the cracks in the event of a miscalculation. It also allows people to pool their resources to ensure that even people with almost zero income have a chance to prepare for the future, where they might otherwise not have that opportunity if left to fend for themselves.

    This is where the libertarian cries, "but that's MAH monneh!" But unless they can introduce an argument to rebut the worth of taxes systematically, it's safe to ignore such complaints.

    For the clean slates: big banks cannot violate laws, bribe people, or perform unethical behavior for a while, because while the US government was okay with it, the USG may or may not be okay with it.
    (A) "May or may not be okay with it?" What does that mean? Are you against banks violating the law, or not? What is an example of a case where you "may be okay with it," and how would that be any different from the US choosing to excuse certain gross violations of the law?

    (B) What counts as a bribe? Is a political contribution a bribe, or is that simply expressing free speech through endorsement of a candidate (like a private citizen could)?

    Our current system acknowledges that bribes are illegal. The problem is that there is much debate over how a bribe is legally defined. If it's defined too broadly and without nuance, then it will also cut into free speech and the political process; if it's defined too narrowly, it's ineffective at combating actual crimes. So what is your definition of a "bribe?"

    For the debts: if we break away, I think it is pretty obvious that people will not expect us to take on the debts of the USA.
    That scenario is not likely. For one, if you broke away from the US, it would be after a war --- secession is illegal, and we would likely have another civil war over it if anyone tried. Assuming you won the war, you could probably do whatever you want with regard to the debt. In your model, for example, taking only the southern bible belt states, you're still taking a portion of the federal revenue of the USA with you (revenue generated from taxes collected from those states). This will affect the US's ability to pay debts back to other nations, which will lead to a higher risk of default, which will damage the US's standing economically, which will in turn damage the standing of any country which holds our debt currently (because it will greatly decrease the likelihood that they will see that money again), which could very well lead to a global economic crisis. You don't pull the rug out from under the table without first making sure everything is properly fastened down, so to speak; what you're describing is similar to, if I and a friend decided to get together and borrow $500 from my neighbor, and we both agree to pay him back, each paying $250, but then my friend decides that he's moving to another neighborhood and he's not going to pay his half of the money back. Either I or my neighbor will lose $250; that lost money doesn't just magically poof back into existence.

    And so unless you propose that this New Union is a perfect, self-sufficient utopia that does zero international trading, no exporting or importing, with its own economy that exists within a vacuum (if that's the case, I'm interested in how you would do that), then there is simply no denying that to shrug off so much debt would have a devastating effect on the New Union, as well as the world economy.

    Although it's worth mentioning as a side note that the southern states are largely the "takers" in America, taking in between 1.5-2 times as much as they put out in federal revenue. So while it would still devastate the economy to sever America in two without first carefully divvying up the debt, it would take a small burden off of the other states with the highest output (such as New York, Michigan and Colorado), at least in the short run.

    All our debts will be war debts because at this early point, we will have been nothing more than a government which has only been a rebellion. It did not pay anything besides the cost of war. It will soon, but not now.
    "It will soon." Exactly. So how will you generate revenue? You'll have to tax someone. Who will you tax? How much will you tax them, and how will you decide these things? How will this system be fundamentally different from the current US system, and what failsafes will be in place to ascertain that the same mistakes are not repeated?
    "I'm sorry
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    For all the people I never stopped
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    "

  10. #10
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    Okay. Even that was a lot. Good thing I didn't tackle all the issues. Why don't I narrow it down even further. We'll talk money and finances in the New Union.
    You say that I didn't take financial care in accounting for inflation. You are right. I didn't. I may cone from a family of accountants, but I am not. This would really be sorted out by financial pros in our new nation, not me. But the rules would be simple: we are to make money or break even, and we are to save money each year. How they do it would be up to them, and if charities need to help certain poor people, then so be it, I will visit them for photo ops myself. But this is how it would go in essence: the gov would give a small amount that people are happy about, and southern hospitality would "cover" the rest.
    What I mean by our government being maybe okay with bank fraud is simple: I don't like it, our fighters don't like it, our people don't like it, but our leaders might find it politically expedient. So they may or may not like it at certain points. A bribe would likely be defined as a specific amount of cash in exchange for a specific vote. Example: "Vote for this bill and I'll give you quite a few (dollar) bills." That would be illegal.
    And all of this argument must assume that we won the war and we are a separate nation. Just as the US refused to pay Britain's debts after the Revolution, we would never pay the USA's debts either. And sure, it would create a financial calamity, but that's the cost of doing business.
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