
“Cheating teachers go to jail. Cheating Wall Streeters don’t. What’s up?” - grej
http://www.washingtonpost.com/blogs/answer-sheet/wp/2015/04/23/jon-stewart-cheating-teachers-go-to-jail-cheating-wall-streeters-dont-whats-up-with-that/
======
_yosefk
You know who _never_ goes to jail? Regulators.

Madoff, for instance, moved from Wall Street into a cell where he belongs,
refuting the above headline. His regulators, however, weren't even charged
with anything AFAIK. That despite their inaction for many years being either
criminal negligence or the result of being bribed.

(From [http://www.bloombergview.com/articles/2014-01-07/jpmorgan-
pa...](http://www.bloombergview.com/articles/2014-01-07/jpmorgan-pays-for-
shorting-madoff-without-telling-anyone) \- "The government regulators, led by
the Securities and Exchange Commission, also didn't catch Bernie Madoff, even
though they were his regulators and that was literally their job. And while
yes JPMorgan ignored some red flags, so did the SEC. Like, the many many
credible letters they got to the effect of "Bernie Madoff is a big ol' Ponzi
scheme." Should the SEC be paying an even bigger penalty than $1.7 billion?")

~~~
kenj0418
> You know who never goes to jail? Regulators.

Nor should they unless they were colluding with him or accepting bribes.

The punishment for just being bad at your job should be getting fired, not
jail. Of course, I doubt many lost their job either.

~~~
pwnna
A bad engineer who designed a bridge that later collapsed and injured/killed
people will go to jail, in addition to being fired.

~~~
wwweston
Can anyone verify that there are cases of criminal negligence where engineers
have been imprisoned as a penalty?

~~~
dmd
[http://en.wikipedia.org/wiki/Maccabiah_bridge_collapse](http://en.wikipedia.org/wiki/Maccabiah_bridge_collapse)
is one in Israel.

~~~
moioci
[http://en.wikipedia.org/wiki/Versailles_wedding_hall_disaste...](http://en.wikipedia.org/wiki/Versailles_wedding_hall_disaster)
another Israeli example.

------
rhino369
Mortgage loan offices aren't quite "Wall Streeters." These are people in your
local communities and they are defrauding the people loaning the money, who
are wall street people. So not like Gordon Gecko or Leo in Wolf of Wallstreet.
But the guy in the illfitted suit who pesters you about mortgages when you in
line to deposit a check.

I make this point because these people aren't super rich wall street people
above the law. And plenty more than one were caught and jailed for it, I've
found 4 examples on the first page of my bing search. Stewart is saying only
one bank exec went to jail, but bank execs weren't the ones doing this
mortgage fraud.

Some "Wall Street" banks do sell mortgages directly and would employ these
mortgage offices, but a lot banks don't like Goldman Sachs, the former Lehman
Bros.

The question is whether big commercial banks were complicit in the fraud of
their lower level employees. You'd need to find an email or someone willing to
testify that the banks knew that the loan offices in podunk were encouraging
fraud. That is an extremely tough case to prove without solid evidence.

Also, this kind of document fraud was only a minor part of the financial
collapse. The big mistake, which Stewart briefly touched on, was that the
rating agencies massive fucked up. The financial risk model they used didn't
work.

~~~
zzalpha
_Also, this kind of document fraud was only a minor part of the financial
collapse. The big mistake, which Stewart briefly touched on, was that the
rating agencies massive fucked up._

Well, no, those are two sides of the same coin.

On the one hand you have people giving out dubious loans and reselling them
while claiming that if you mix the shit up the right way it turns into gold.

On the other hand you have ratings agencies who bought into the nonsense.

The two were 100% complicit and, I think, equally to blame.

~~~
rhino369
But the dubious loans were known to be dubious, it wasn't fraud. It would have
been a problem even if there was no fraud.

The fraud exacerbated the issue further, but I wouldn't say it is two sides of
the same coin.

~~~
zzalpha
I'm not claiming they were equally complicit in _fraud_. I'm saying the
ratings agencies and the lenders are equally responsible for the collapse. The
lenders knew they were giving out dubious loans. The ratings agencies bought
into the mathematical models.

Frankly, I think it was simply stupidity and hubris. On both sides. It's
amazing how stupid people are in the face of irrational exuberance. Which is
why I say: they're equally complicit.

As are those folks who took the loans (though to a lesser degree, as they may
have been poorly or actively misinformed by loan officers), and those folks
who bought and sold the derivatives knowing full well what was in them (or at
least were aware of the models the risk assessments were based on).

Which is where ultimately regulators and regulations are supposed to play a
role: to counteract the market's tendency toward irrationality. IMO, if you
want to lay the crash at the feet of anyone, it's captured regulators,
toothless regulatory bodies, and elected officials who bought into Wall Street
bullshit that they could mind their own playground.

And really, you could lay all that straight at the feet of that granddaddy of
all corruption issues: money in politics.

------
falsestprophet
Jon Stewart's thesis is that teachers are punished for crimes and "Wall
Street" is not.

In this segment he singularly cites the actions of loan officers soliciting
incorrect information comparing their actions to teachers falsifying test
results.

First of all, loan officers are hardly "Wall Street" fat cats. They are low
level employees who are paid an average of $50,000 [1] and do not work for
"Wall Street" firms like investment banks.

Secondly, loan officers operate throughout the United States rather than
actually on Wall Street or in Manhattan and, as a group, are subject to the
jurisdiction of the federal government, 50 states, and 3,144 counties each
with independent prosecutors (elected state's attorneys, district attorneys,
etc.).

If none of the thousands of entities who could have brought cases have done
so, either there is conspiracy vaster than any other or there are not credible
cases to bring.

[1] [http://www.glassdoor.com/Salaries/loan-officer-salary-
SRCH_K...](http://www.glassdoor.com/Salaries/loan-officer-salary-
SRCH_KO0,12.htm)

~~~
wehadfun
Teachers, Garbage men... The DA and judges in Atlanta love to throw low level
employees in jail for doing their jobs. Maybe they are too dumb to realise
that these employees more or less do what they are told.

No one below the district level should have been on trial for this.

I agree with you to hold the actual loan officer liable is dumb. They were
following directions.

[1] [http://fox17online.com/2015/03/09/garbage-man-to-
spend-30-da...](http://fox17online.com/2015/03/09/garbage-man-to-
spend-30-days-in-jail-for-picking-up-trash-too-early/)

~~~
kjs3
So knowingly cheating in order to get a bigger bonus for themselves isn't
criminal because they were told to do it? Pretty screwed up world you live in
from an ethics perspective, but then I've heard all sorts of "they might be
crooks but they shouldn't be held _accountable_ for it or anything" sophistry
around this case.

~~~
Lawtonfogle
Being told by an authority results in people going against their morals for
the majority of people. Look up the Milgram experiment.

~~~
eli_gottlieb
>Being told by an authority results in people going against their morals for
the majority of people.

I think it's somewhat simpler: for a lot of people, obeying authority _is_
their morality.

------
Animats
This is perhaps the biggest failure in the aftermath of the 2008 financial
collapse. There should have been many more criminal prosecutions on Wall
Street. It didn't help that the Secretary of the Treasury at the time came
from Goldman Sachs.

Criminal convictions of CEOs are useful. They're very effective in changing
CEO behavior. Sending a few low-level drug dealers to jail for a year does
little to change drug dealer behavior in the neighborhood. Sending a few
Fortune 500 CEOs to jail for a year tends to result in substantial CEO
behavior modification. There was a famous example of this in 1961, when
executives of GE, Westinghouse, and Allis-Chalmers were found guilty of price-
fixing and sent to jail. That changed corporate anti-trust behavior for a
generation.

~~~
jsprogrammer
People should not be punished soley to 'make an example' or for large-scale
'behavior modification'. Punishment should only be doled out for actual
wrongdoings and only proportional to that individual's actions.

~~~
anigbrowl
You're assuming that the CEOs cited in the example were not actually guilty.

~~~
res0nat0r
Is there any direct, actionable evidence that individual CEO's willingly were
involved with illegal activity related to the 2008 finance crisis? Most of
what happened at the time was not technically illegal thus a large complex
system with many participants makes prosecuting people very hard.

~~~
anigbrowl
Not obviously. I made another comment upthread to the same effect - between
the changes in the regulatory environment and the complexity of financial
institutions, it's incredibly hard to prove criminal intent. I don't know what
can be done about this - require all board meetings to be recorded? Introduce
concepts of strict liability for financial mismanagement involving losses
above a certain threshold?

------
MrZongle2
Simple: there _are_ two Americas.

The first is the one that is populated by the wealthy and the elite; some
people you've heard of, and a lot you've not. They're former Presidents and
senators, important political donors, lobbyists, and a cloud of related
individuals that orbit trust funds and old money. This America features well-
groomed lawns, catered luncheons, executive offices, first-class health care,
golden parachutes and custom transportation.

The second is where the rest of us live. It features waiting both in lines and
on telephones, meals grabbed on the fly, taxation, potential observation and
harassment by Federal or local security agencies, wildly varying health care,
and advertisements on everything.

~~~
atom-morgan
Example: Petraeus just got a slap on the wrist

------
tokenadult
This could be taken to mean that society (correctly, in my opinion) considers
the work of schoolteachers to be more crucial for the future of our society
than the work of "Wall Streeters." With a more important role in society comes
higher responsibility and just possibly greater accountability.

The _Answer Sheet_ opinion blog, from which this post commenting on a Jon
Stewart _Daily Show_ is kindly submitted for our discussion, basically has a
theme of decrying any public policy that makes schoolteachers accountable for
actually teaching something to the learners in their care. That's a defensible
policy position, I suppose, if you think that employment in the public school
system is a jobs program for graduates of teacher-training programs. But I
think it is also a defensible policy position to agree that spending money on
schools is good, good for society in general, but especially so if the schools
actually help learners learn. If learners are not learning well in school, and
similarly disadvantaged learners in other schools are learning better, let's
learn from the schools that are doing better how they are succeeding, and
emulate their practices. That doesn't sound very radical to me.

Right now in the United States, the school-to-school variance in learning
results of pupils is not very large, not even particularly large between poor
and rich neighborhoods (by international comparisons).[1] But the teacher-to-
teacher variance in teaching effectiveness within any one school is quite
large, and one of the best things schools could do to become more effective
rapidly is simply to hire the best available teachers, and let the lowest few
percent of teachers (by teacher effectiveness) seek other occupations more
suited to their abilities.[2] Other measures to improve teacher quality will
also be helpful for schools and the learners in their care.[3] Teachers who
cheat on tests used in part to gauge the effectiveness of teachers cheat all
of society out of having better teachers.

[1] [http://educationnext.org/when-the-best-is-
mediocre/](http://educationnext.org/when-the-best-is-mediocre/)

[2]
[http://hanushek.stanford.edu/sites/default/files/publication...](http://hanushek.stanford.edu/sites/default/files/publications/Hanushek%202009%20Teacher%20Deselection.pdf)

[http://hanushek.stanford.edu/publications/valuing-
teachers-h...](http://hanushek.stanford.edu/publications/valuing-teachers-how-
much-good-teacher-worth)

[3]
[http://hanushek.stanford.edu/sites/default/files/publication...](http://hanushek.stanford.edu/sites/default/files/publications/Hanushek%202014%20Koret%20ch2.pdf)

~~~
s73v3r
"This could be taken to mean that society (correctly, in my opinion) considers
the work of schoolteachers to be more crucial for the future of our society
than the work of "Wall Streeters." "

If that were true, wouldn't we pay them more and treat them better?

~~~
tokenadult
Teachers have job security that is very rare in the private sector. They also
have fully funded benefits of a kind that is rare in most occupations at
matching salaries. They also get a lot of psychic rewards from their jobs, and
graduates of teacher-training programs are in large supply, changing the
supply:demand ratio for that occupation. I would indeed be glad to pay
teachers more in salary, but I'd also like to be sure that wherever your
children or my children go to school, the friendly local school is hiring only
effective teachers, not ineffective teachers. If teachers get behind public
policies that ensure that, then I think they will see increases in pay. (See
the links in my earlier post in this thread.)

~~~
wavefunction
How many teachers do you actually know? I ask because both my parents were
teachers and most of their friends are teachers and it's a lot of hard work
for not much reward if any, whether financial or otherwise.

Students arguing about their grades. Students refusing to write papers or read
articles about subjects they cannot handle intellectually (because it
"conflicts with their religion or politics"). Many students who simply don't
care about the subject material or education in general. Poor pay and long
hours spent gradings papers and tests. Administrative duties outside of their
teaching duties. Low pay and patronizing moronic administrative staff.
Pensions reduced so that state legislatures can give ill-advised tax breaks to
the wealthy and corporations (but I repeat myself).

Teaching is something done out of passion and while I can understand the
passion I've seen derived from touching one life, it sure isn't the cake-walk
you're alleging.

------
rayiner
Because it's easy to understand why cheating on tests is wrong, and easy to
explain to a jury what people did that was wrong. Try to explain LIBOR
manipulation to a jury and explain why it's wrong.

~~~
kaa2102
A regulator or prosecutor needs to first be willing to charge a bank or Wall
Street executive before anything can get to a jury.

------
suprgeek
Politically connected & Rich people do not go to Jail for White-collar crimes.
Think about the revolving door between Wall street and the Obama/Bush/Clinton
administrations.

Would you put your "buddy" in Jail if it meant that the political
contributions would dry up and your opponent is going to get a war chest to
fight you? Of course not!

But an educator? These people cheated to keep their jobs and get (minor) pay
raises - by definition they cannot fight back so the full weight of the
Criminal Justice system (Racketeering Laws - typically used against Mafia
figures) was used to toss some of them in Jail for upto 20 years!

Let's face it - the American Criminal justice system basically preys on those
least able to protect themselves from its abuses.

~~~
MaysonL
Charles Keating was fairly well connected: remember the "Keating Five"? (US
Senators who tried to influence regulators to go easy on Keating)

He spent over four years in federal prison after being convicted of white
collar crimes.

------
15step
You don't have to go any farther then the fact that Navinder Sarao might go to
jail for 20 years, but Jon Corzine, the CEO of the brokerage Sarao used,
continues to walk free as one of the must successful failures ever.

------
bko
I think prosecutors would rather fine the banks tens of billions of dollars
rather than throw people into jail.

For instance, the JPM $13 billion settlement (summarized):

\- $2 billion to the Justice Department, which will then deposit the money
into a fund at the United States Treasury.

\- $7 billion, will flow to a range of government authorities, some more
obscure than others

\- JPMorgan agreed to make a “lump sum payment” of $4 billion “payable to
Freddie Mac and Fannie Mae, divided between them,”

\- The National Credit Union Administration, the federal agency that regulates
credit unions, said it would collect a $1.4 billion share of the $7 billion
pie “for losses incurred by corporate credit unions as a result of the
purchases of the faulty securities.”

\- $515 million goes to FDIC

\- $613 million to NY Attorney General (expand homeowner assistance programs)

etc, etc, etc...

[0] [http://dealbook.nytimes.com/2013/11/20/where-does-
jpmorgans-...](http://dealbook.nytimes.com/2013/11/20/where-does-
jpmorgans-13-billion-go/?_r=0)

------
2close4comfort
Jail is for people who can't afford to get out of it.

~~~
damian2000
I was thinking that when watching a doco about western tourists to Thailand
who get caught with small amounts of a drug on them. They get shaken down by
the local police for a few thousand dollars, up to whatever they can afford.
Those who can't pay get put in jail for a while. Not sure if it was bribery or
what, but it seemed accepted by everyone involved.

~~~
tsotha
That's not really an apples-to-apples comparison. Places with lots of tourists
usually go pretty easy on them whenever it's possible. You don't want to scare
your meal ticket into going somewhere else.

------
heisenbit
There is a huge cultural problem and the teachers and MBS scandals are just
the tip of the iceberg.

When it is acceptable that results count no matter what the means. When it is
acceptable that results are measured by a single number. When conflicts of
interest are ignored by regulators

Then you get:

    
    
      - inflated grades
    
      - inflated assessments of property values
    

but also:

    
    
      - inflated arrests by policeman chasing quotas instead of helping citizens (in other parts of the world police are reluctant to arrest people due to dislike of paperwork)
    
      - inflated claims by prosecutors turning a blind eye to weak evidence (in other parts of the world prosecutors don't fear for their own job)
    
      - inflated money printing
    
      - inflated tech stock valuations
    
      - prolonged ignorance of default risks
    
      - HFT
    

Markets work but there is such a thing as externalized costs. Regulators have
a duty to monitor and step in when the line is overstepped. If they don't the
benefits accrue to the powerful who cheat and the cost are born by the
powerless.

It is a good thing that the "regulator" stepped in and stopped the teachers
grade inflation.

However the way the regulator did this here is another example of single
minded black and white thinking. Just because the grade inflation problem is
bad it does not mean one can fix it with a single blow of a heavy hammer. Fear
of rare random enforcement actions will only intimidate the people but won't
stop further crimes.

Hard real life problems need well planned, consistently implemented and
balanced measures.

------
jessaustin
If we really cared to prevent "financial crises" like the one under
discussion, we wouldn't be wringing our hands about whom to imprison. Instead,
when firms went bust, we'd leave them that way. When all the money is gone,
shareholder lawsuits will punish corrupt and incompetent executives more than
prosecutors ever dreamed.

EDIT: for those who've forgotten what actually happened, Taibbi has a good
primer:

[http://www.rollingstone.com/politics/news/secret-and-lies-
of...](http://www.rollingstone.com/politics/news/secret-and-lies-of-the-
bailout-20130104)

------
tomohawk
I would hope that adults entrusted with the care of our children and betraying
that trust would be punished much more severely than wall streeters engaged in
some sort of shenanigans.

~~~
jgoewert
I would hope that adults entrusted with the care of our children would be paid
more to get the top talent the job requires. Even a 1% change in a students
learning is an immeasurable sum of profit to an organization and someone who
can eek that out should get the compensation due.

------
scelerat
Stewart's comparisons remind me of Eddie Izzard's riff on mass murderers.
Small numbers of crimes, committed by a small number of people: easy to grasp
and easy to prosecute; large numbers of crimes committed systemically: the
mind boggles; medals more likely than punishment.

Izzard (NSFW):
[https://www.youtube.com/watch?v=Bk_pHZmn5QM](https://www.youtube.com/watch?v=Bk_pHZmn5QM)

------
jrockway
Privileged Wall St. firms can afford better lawyers than schoolteachers in
Atlanta? I had no idea...

------
crimsonalucard
Black people get shot up by police, white people don't. What's up?

~~~
tzs
White people get shot by police. You have to look to find the cases, though,
because they don't generally make the national news.

Here are a few.

[http://wreg.com/2014/11/25/salt-lake-cop-cleared-in-
shooting...](http://wreg.com/2014/11/25/salt-lake-cop-cleared-in-shooting-of-
unarmed-white-man/)

[http://wreg.com/2015/04/22/family-of-unarmed-white-man-
kille...](http://wreg.com/2015/04/22/family-of-unarmed-white-man-killed-by-
police-to-be-paid-3-million/)

[http://www.washingtontimes.com/news/2014/nov/27/white-
teen-g...](http://www.washingtontimes.com/news/2014/nov/27/white-teen-gilbert-
collar-killed-by-black-cop-trev/?page=all)

In fact, more white people than black people are shot by police in the US. The
rate for blacks getting shot is higher, but not the number.

~~~
kakkou
Yet these stories don't make it onto the national news? They aren't plastered
all over CNN? Where are the riots for these deaths?

------
goldfeld
What about those teaching cheaters?

------
xmlblog
It's called money.

------
brohoolio
Seriously.

