by OLD1953 » Tue Oct 02, 2012 1:29 am
To analyze the AMEX story a bit, it says they will pay 112.5 million to settle for defrauding 250,000 customers. Doubtless the number defrauded was much higher, but suppose it was 250,000. The story says they were in this business of fraud from at least 2003 on. At 55$ per customer per year for 9 years, that would be 495$ per customer. The fine amounts to 450$ per customer, assuming it was only 250,000 involved and none of them were cheated of more than 55$ per year, both of which assumptions seem highly doubtful to me. So they keep 10% of their illegal profits and are fined the rest. (Assuming they don't have a separate unit for fraudlent promotion of course, I'm assuming they don't so the overhead is covered by the legitimate activities of the company. Otherwise I'd have to take out overhead.) That doesn't seem very punitive to me.
The bailouts will stop when the pressure to pay is exceeded by the pressure from taxpayers (in Germany) to stop paying.
To analyze the AMEX story a bit, it says they will pay 112.5 million to settle for defrauding 250,000 customers. Doubtless the number defrauded was much higher, but suppose it was 250,000. The story says they were in this business of fraud from at least 2003 on. At 55$ per customer per year for 9 years, that would be 495$ per customer. The fine amounts to 450$ per customer, assuming it was only 250,000 involved and none of them were cheated of more than 55$ per year, both of which assumptions seem highly doubtful to me. So they keep 10% of their illegal profits and are fined the rest. (Assuming they don't have a separate unit for fraudlent promotion of course, I'm assuming they don't so the overhead is covered by the legitimate activities of the company. Otherwise I'd have to take out overhead.) That doesn't seem very punitive to me.
The bailouts will stop when the pressure to pay is exceeded by the pressure from taxpayers (in Germany) to stop paying.