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unblock

(52,209 posts)
1. they're bullshit, but not for that reason. they can't really "pass them off to the consumers".
Tue Jul 15, 2014, 10:58 AM
Jul 2014

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!"

 

JayhawkSD

(3,163 posts)
4. The cost of fines is actually paid by the share holders.
Tue Jul 15, 2014, 11:06 AM
Jul 2014

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)
6. I guess you're talking
Tue Jul 15, 2014, 11:20 AM
Jul 2014

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)
7. All The People That Got Caught Up In Citigroups Misdeeds Certainly Don't Benefit From This.....
Tue Jul 15, 2014, 11:33 AM
Jul 2014

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'.

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