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Author: Goofyhoofy Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 465356  
Subject: Bringing the 'Broken Windows' Theory to Wall St Date: 3/12/2012 8:18 AM
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Everybody knows what the 'Broken Windows' theory is; the originator of it just died a few days ago. I wish he were still around, because I would like to ask how he explains that while crime in New York did go down after his recommendations were implemented (going after the small problems, which, if ignored, lead to larger problems and an overall sense of 'who cares'?), crime also went down in cities across the country where his recommendations were not implemented.

Still, the theory holds some interest merely because it seems to appeal to common sense, and because everyone has, at one time or another, seen the blight of "broken windows", albeit in the form of derelict buildings, squeegee men, or whatnot.

Now the author says "Suppose we applied the theory of Broken Windows to Wall Street." In other words, how about if we stop allowing small crimes to accumulate there, which beget an attitude of "it doesn't matter" and which lead to larger and larger crimes, culminating in things like stock frauds, bank frauds, ratings company fraud, mortgage industry fraud, tax evasions, and all the rest that litter the headlines these past few years.

Suppose we stopped allowing companies to manage earnings, which is seen as "minor" but which is, at its heart, lying to shareholders about results. How about if we prosecute vigorously tax shifting to offshore havens? Why not put CFO's on notice that their numbers must be accurate or they will go to jail? Why not stop trying to gut the regulations that provide the orderly framework for investment?

An interesting take:
http://www.alternet.org/economy/154426/what_if_the_%26ldquo%...
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Author: tim443 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 387304 of 465356
Subject: Re: Bringing the 'Broken Windows' Theory to Wal Date: 3/12/2012 8:47 AM
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Some similarities to the "Are corporate leaders psychopaths?" thread, I don't recall having seen that site before.

Another link at the bottom discussing "threatening US Liberty" but it is a bit too political to discuss on METaR as (though it does blame both sides) it is a bit more on one side than the other.


Anymouse

<warning you are now leaving the METaR no politics zone, please fasten your seat belt and keep going somewhere else>

http://www.alternet.org/story/154456/is_america_on_the_verge...

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Author: WendyBG Big gold star, 5000 posts Top Favorite Fools Top Recommended Fools Feste Award Winner! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 387322 of 465356
Subject: Re: Bringing the 'Broken Windows' Theory to Wal Date: 3/12/2012 11:55 AM
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I would be happy to accept the position of head of the do-nothing SEC.

Wendy

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Author: FoolYap Big funky green star, 20000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 387326 of 465356
Subject: Re: Bringing the 'Broken Windows' Theory to Wal Date: 3/12/2012 12:45 PM
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How about if we prosecute vigorously tax shifting to offshore havens? Why not put CFO's on notice that their numbers must be accurate or they will go to jail? Why not stop trying to gut the regulations that provide the orderly framework for investment?

The people who would lose from implementing those ideas are the people currently in charge of writing the laws and regulations -- or in the case of regulations, removing them -- you're referring to. That's why not.

--FY

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Author: Dwdonhoff Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 387329 of 465356
Subject: Re: Bringing the 'Broken Windows' Theory to Wal Date: 3/12/2012 1:01 PM
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Now the author says "Suppose we applied the theory of Broken Windows to Wall Street." In other words, how about if we stop allowing small crimes to accumulate there, which beget an attitude of "it doesn't matter" and which lead to larger and larger crimes, culminating in things like stock frauds, bank frauds, ratings company fraud, mortgage industry fraud, tax evasions, and all the rest that litter the headlines these past few years.


Whoa, wait just a minute.... you mean, like, actually *ENFORCING* laws already in place?

Why, that would overwhelm the system, no? Plus, if done even-handedly, that would decimate political contributions (aka 'the protection racket') no?

How crazy & radical is that!?!?!

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Author: SuisseBear Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 387338 of 465356
Subject: Re: Bringing the 'Broken Windows' Theory to Wal Date: 3/12/2012 3:52 PM
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Why not put CFO's on notice that their numbers must be accurate or they will go to jail?

yep, let's pass a law! ... oops:

The Sarbanes-Oxley Act of 2002, section 302, “Corporate Responsibility for Financial Reports,” requires the CEO and CFO of publicly traded companies to certify the appropriateness of their financial statements and disclosures and to certify that they fairly present, in all material respects, the operations and financial condition of the company.

then there is this:

The mediocre financial CEO who engages in accounting control fraud because it is a “sure thing” causes the bank to report record (albeit fictional) profits and becomes wealthy and politically powerful. He uses his wealth to make charitable and political contributions that make him far harder to sanction. ... The Supreme Court has held that banks and other entities that aid and abet securities fraud are immune from suit by the victims of securities fraud. Only the federal government may sue those that aid and abet fraud. The federal government has cut the number of financial fraud prosecutions by over one-half over the last twenty years even as financial fraud has grown massively. No elite CEO leading a control fraud that helped drive the current crisis has even been indicted. Elite CEOs can defraud with near impunity and become wealthy.


...as to this...

Why not stop trying to gut the regulations that provide the orderly framework for investment?

great idea.

More than 60 years of financial regulation under the Glass Steagall Act came to an end in 1999 after intense lobbying from the banking industry. Many economists say the resulting increase in risky and fraudulent bank practices led to the financial crisis four years ago.



Hmmm... unbridled campaign finance preventing the large fraudsters from punishment, and driving "deregulation"?

Looks like the root problem would quickly come into focus... for those chosing to see...

http://www.nysscpa.org/cpajournal/2003/0703/features/f073603...
http://www.creditwritedowns.com/2012/03/wall-streets-broken-...
http://www.aljazeera.com/programmes/insidestoryus2012/2012/0...

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Author: tgrmn Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 387459 of 465356
Subject: Re: Bringing the 'Broken Windows' Theory to Wal Date: 3/14/2012 11:41 AM
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Govt., Security, Mil., Corps...
Free, Change, "Truthout"

I Got it.

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