It seems that more and more scandals and dishonestly is happening in the financial industry more frequently. Since when did ripping off and scamming become so popular? Well in an USA Today article by Lefteris Pitarakis, AP it was said that maybe the "punishments" for such crimes are ironically solutions for the people committing these crimes.
Recently, GlaxoSmithKline agreed to pay $3 billion to the government for failure to report safety data on it's diabetes drug and for marketing it's antidepressants for unauthorized uses. Similar deals have been made by Pfizer in 2009 and Abbott Laboratories in May. Not only has the pharmaceutical industry had major scandals but also the banking industry. In the 1980s the savings-and-loan debacle was forced a bailout of $100 billion because of scams in the investment banking and similar fund industries. Recently, the Libor (London interbank offered rate), which has a major impact on mortgages, credit cards and other borrowing lied about the rate they were offered on short-term loans.
Over a 1,000 people were convicted of felonies during the savings-and-loan crisis and during the Libor scandal, Barlays CEO Bob Diamond and two other executives resigned. It is certain that financial penalties are not the answer to stop these crimes. In a 2005 book Freakonomics, the authors pointed out that when a day care center began to fine parents who were late to pick up their children, tardiness increased. Parents saw this penalty as a simple way to excuse their tardiness.
Making these criminals pay a simple price that they can pay off is just giving them the okay to do these things. If they know their consequences are that easy, why not do it right? So regulations and expensive fines aren't the solutions to change criminal behavior, the way to change it is "with criminal penalties".
No comments:
Post a Comment