General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsFines on corporations are such bullshit
They pass them off to the consumers and by other means.
Prison time for CEO's cannot be conned off.
unblock
(52,209 posts)a one-time fine doesn't change the business decisions involved in optimal pricing. it doesn't change supply or demand in any way.
if it makes sense to increase prices *for completely unrelated reasons*, then a spiteful and unrepentant ceo will certainly use the fine as an excuse to raise prices, disguising the real reasons.
among the main reason that the fines are bullshit is that they need to greatly exceed the profit from wrongdoing to even remotely provide any deterrent effect. even when they seem large, they're still small compared to the profit and the likelihood of having to actually pay a fine. and most companies won't keep that much cash; they'll dividend it out to shareholders or otherwise spend it long before the government can impose a fine that large. that way, even if the government were to have the stones to impose and enforce a fine that would actually shutter the businesses, the investors still made a profit on the misdeeds.
as it is, these fines merely amount to the government saying to the crooks, "well done, just give us our cut and keep right on doing what you do oh so well!"
Sunlei
(22,651 posts)JayhawkSD
(3,163 posts)But they don't care either because the action that caused the fine still made the price of the shares go up.
The fines are merely a "cost of doing business" and, as unblock says, are offset by the higher amount of profit generated by the action which drew the fine. The $9 billion fine that the US imposed on BNP was a small fraction of the profit they generated by making those abusive loans.
onethatcares
(16,168 posts)about the 7 billion dollar fine on Citigroup which to my surprise the articles don't list how much they screwed the American public
out of.
Must be one of those liberal press things.
global1
(25,245 posts)they been foreclosed on and lost their homes and their lives were devastated - and they've been forgotten. I guess that's another cost of 'just doing business'.
woo me with science
(32,139 posts)The government's cut for protecting them.