Financial Reform Killing Off Bonds By Both Requiring Ratings & Making It Impossible To Rate Bonds
from the hey-isn't-there-a-first-amendment-somewhere? dept
Ah, the unintended consequences of bad legislation. It’s no surprise that many people have pinned a lot of the blame on the financial crisis on the ratings agencies (mainly Moody’s and S&P). After all, they were the ones who went out there and said that collections of slices of dices of the worst mortgages around should be rated as top notch, sure-fire, investments. And there were clear conflicts of interest in how the ratings agencies did their ratings. But, in the end, the ratings agencies were really just giving an opinion — and opinions are (last we checked) supposed to be protected by the First Amendment.
The real problem came from the government writing those agencies’ ratings into the law. Basically, the government, in a really short-sighted attempt to avoid financial problems, required certain institutions had to maintain a percentage of “highly rated” or “investment quality” bonds, in order to engage in certain activities. Suddenly, these “opinions” weren’t just opinions, but had important legal consequences. If a ratings agency downgraded an investment, it could legally force some holders of those bonds to have to sell them to maintain its investment ratios. With that, those ratings also took on the sheen of something objective and factual, rather than a random opinion put forth by a bunch of guys (mostly guys) who might not know what’s really going on, and who have some serious conflicts of interest.
However, with the new financial reform bill in place, apparently one provision is that rating agencies can be liable for getting the rating wrong. Planet Money explains the unintended consequences this creates:
Under the new law, ratings agencies can be sued for making bad ratings decisions, if the ratings are included in formal documents that companies file with the SEC when they issue bonds.
That’s making the agencies nervous. As a result, they’re telling the issuers not to include their ratings in the formal documents filed with the SEC, according to the WSJ.
That’s a particular problem for asset-backed securites — bonds made up of bundles of consumer loans such as mortgages and auto loans. Federal law requires those bonds to include ratings in their formal documentation.
Because of that, the issuance of asset-backed securities has vanished. So, basically, the government requires these ratings be used on these types of financial instruments, but makes the ratings agencies liable if they make a bad guess in doing their ratings. You can understand the reasoning, but no ratings agency can be perfect. It’s really making a guess, and eventually you’re going to make a bad guess.
I really wonder if the part of the law making ratings agencies liable would stand up to a First Amendment challenge. But, in the meantime, asset-backed securities are on hold. Now, some may argue that this is a good thing, because “asset-backed securities” were part of the problem in the financial crisis. But that’s definitely throwing out a very large baby with a little bit of bathwater. Yes, there were massive problems from asset-backed securities, but that doesn’t mean the concept of asset-backed securities themselves are bad. In fact, they can be quite useful.
Filed Under: financial crisis, unintended consequences
Comments on “Financial Reform Killing Off Bonds By Both Requiring Ratings & Making It Impossible To Rate Bonds”
Even socialism looked good on paper. It wasn’t until it was actually practiced that its short comings were truly realized.
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Last I checked the U.S Constitution started off with a socialist statement. “We The People…”
With all the crap thats going on in the states, I’d rather be a socialist then a capitalist right now.
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Wow, that is some quality wrong. I mean you start off claiming the Preamble as a socialist statement, like socialism is the only form of government concerned about its people, but neglect to recall that it mentions liberty which you have decidedly less of under any form of socialism.
Your second line tells me that you’re either grossly misinformed on economic, social, and political happenings in nations that are currently socialist, as opposed to the US, or you’re just a freaking moron.
I guess you could also be trolling though, so I’ll stop feeding just in case.
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I suspect the person you were responding to was being somewhat facetious, not to mention ephemeral, and your overreaction to an apparently facetious statement demonstrates your intolerance against anyone who disagrees with you.
BTW, I mostly agree with Mike on this one, I think the government should mind its own business. It’s not the governments job to secure the safety of your investments, such is the antithesis of free market capitalism. That’s not to say the government shouldn’t protect against fraud of course.
Peculiar definitions of socialism.
No. Calling Junk a AAA bond is still fraud by any stretch of the imagination. Part of the recent economic meltdown was a direct result of trust in these agencies evaporating. THAT is the underlying problem. Letting them run amok clearly didn’t work out very well.
Holding rating agencies to account is no more socialism than the UCC is.
first amendment in a commercial setting ludicrous. the first amendment should never be allowed in a commercial setting. you should be required by law to tell the truth, the whole truth and nothing but the truth and and all contractual mind **** games should be allowed either.
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first amendment in a commercial setting ludicrous.
Really? How do you define commercial setting vs. non-commercial?
the first amendment should never be allowed in a commercial setting.
Then, no problem, the gov’t can censor books (which are commercial), movies (commercial), software (commercial) and music (very commercial).
you should be required by law to tell the truth, the whole truth and nothing but the truth and and all contractual mind **** games should be allowed either.
No one is accused of *lying*. If there is fraud, you can sue for fraud. But an *OPINION* is not about “truth” or “lying.” It’s about an OPINION, which is neither right nor wrong.
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“”No one is accused of *lying*. If there is fraud, you can sue for fraud. But an *OPINION* is not about “truth” or “lying.” It’s about an OPINION, which is neither right nor wrong.”
Mike in this case you have no clue. It has nothing to do with opinion. It has to do with shopping for ratings. Banks, investment houses, corporations, etc were walking into moody’s, Dun & Bradstreet, Standard & Poor’s, etc and saying “I want a triple A rating or I will go across the street”. That is what caused the entire financial meldown, rating shopping.
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That isn’t what caused the financial meltdown… I explain a little more below but if asked I can go into further details.
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I read your entry below. Yes I understand it was a pyramid scheme. Loans taken out, backed by insurance, etc, allowing for extremely hign amouts of leverage. These assets bundled and used as collateral for other loans. These assets were rated alot higher than they should have been. They should have been rated BB or BB- “Non-investment grade speculative”. These rating agencies were trusted to be accurate.
With out the higher ratings on these bundled assets the loans would never have been made. In the end this whole house of cards and financial meltdown was caused by these assest being rated higher than they should have, all because of rating shopping.
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“No one is accused of *lying*. If there is fraud, you can sue for fraud. But an *OPINION* is not about “truth” or “lying.” It’s about an OPINION, which is neither right nor wrong.”
Going to have to disagree, Moody’s and co did not sell themselves as just general financial advisors that you can find in any phone book, saying little more than “in your opinion we think you should buy/sell” but rather as quasi-official independent expert analysts of the financial risks of instruments and then said to everyone “trust us we know what we are doing”
It’s as different as the difference between a diamond salesman convincing you your girlfriend will like that pretty diamond ring and an expert from somewhere like the Gemmological Institute of America (GIA) and the European Gemological Laboratory (EGL) telling you the ‘true’ quality of the diamond
If you are going to (over)sell yourself and your services in certain way’s like Moody’s and co (or the GIA/EGL) you have to be prepared to accept the (greater) consequences when you mess you
first amendment in a commercial setting ludicrous. the first amendment should never be allowed in a commercial setting. you should be required by law to tell the truth, the whole truth and nothing but the truth and and all contractual mind **** games should be allowed either.
Free speech in commerce is a regulated courtesy, not a right
Always has been, always will be. Or Mike, would you like to invest in this offshore fund I have? If that doesn’t suit you, or gives you heartburn, I have these acai berries that will not only clear your headache but let you lose five pounds? Should I fax the order form over to you? Or just mail you thrice daily until you’re ready to do business? By the way, I just posted on Twitter that XYZ Corp is about to face a SEC investigation for fraud. Short ’em will you can!
Modern-style commerce and corporations exist at the courtesy and generosity of the populace. Business people should routinely be reminded of that fact.
Re: Free speech in commerce is a regulated courtesy, not a right
Free speech in commerce is a regulated courtesy, not a right
Um. So, it’s okay for the gov’t to censor music and movies, so long as those music and movies are making money? I don’t buy it.
Or Mike, would you like to invest in this offshore fund I have?
Huh? What does that have to do with giving an opinion on the quality of an investment and free speech? If you *deceive* people, then you get charged with fraud — already on the books. The question here is whether or not you can be liable for giving your opinion on a financial instrument.
If that doesn’t suit you, or gives you heartburn, I have these acai berries that will not only clear your headache but let you lose five pounds?
I don’t understand the point you’re making.
I just posted on Twitter that XYZ Corp is about to face a SEC investigation for fraud.
Yes, if you are lying and trying to defraud people there are already statutes on the books for that.
If, however, you are just giving your honest opinion on the quality of an investment vehicle, and it turns out that you ended up being wrong, why should you be liable? Do you really not see the difference?
Modern-style commerce and corporations exist at the courtesy and generosity of the populace. Business people should routinely be reminded of that fact.
Yes, indeed, but that still doesn’t allow the gov’t to say they can’t state their opinions. Sorry.
Also: useful to whom?
“Yes, there were massive problems from asset-backed securities, but that doesn’t mean the concept of asset-backed securities themselves are bad. In fact, they can be quite useful.”
Could someone explain to me to whom these are useful?
Re: Also: useful to whom?
Could someone explain to me to whom these are useful?
The ability to break up assets into securities does allow for a wider range of ways to finance expansion. Do you think mortgages are a bad thing in general? That’s a form of a derivative, you realize? Student loans? Those are possible because of the ability to create derivatives. But we should get rid of them because some people don’t understand them and others abused them? Do you really want to go that far?
Re: Re: Also: useful to whom?
“The ability to break up assets into securities does allow for a wider range of ways to finance expansion. Do you think mortgages are a bad thing in general? That’s a form of a derivative, you realize? Student loans? Those are possible because of the ability to create derivatives. But we should get rid of them because some people don’t understand them and others abused them? Do you really want to go that far?”
Mike on this subject, you are getting as twitchy as the IP maximalists do when you say artists don’t need the record labels. A derivative is a financial instrument that can include swaps, futures, and options. A derivative is incapable of having a value of its own it is only an agreement between parties. As such opinions do not matter only what backs the derivative matters.
You line …
“The ability to break up assets into securities does allow for a wider range of ways to finance expansion.”
Shows you know nothing about leverage -vs- risk. Derivatives are imaginary and artificial markets, which cause things like the tulip festival, the stock market collapse before the great depression, the internet bubble, the housing collapse, and every other monetary collapse we have seen through out recent history. They are nothing but speculation and gambling with our future.
the rich
commercial setting:
the exchange of goods and services from producer (aka the guy who takes your money) to final consumer for a sum or an exchange of goods and services.(aka the guy paying for it)
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the exchange of goods and services from producer (aka the guy who takes your money) to final consumer for a sum or an exchange of goods and services.(aka the guy paying for it)
You didn’t answer my question. So, in what you say here, it means it’s perfectly fine for the gov’t to censor movies, books and music, because it involves selling a product from a producer to a consumer for a sum.
That’s obviously false.
When you have three entities that act as a defacto monopoly, regulation is necessary for the benefit of everyone, including the industry being regulated. This self imposed moratorium won’t last, as one of the three will crack, and then the other two will follow suit. Or maybe a new player will see the obvious opportunity. If a rating agency acts as a fiduciary, and acts reasonably, they won’t have to worry (much- people will sue for anything).
What is most disappointing is that nothing was done about the disparate treatment of muncipalities, which get much lower ratings for much better bonds. Even now, almost no govt has gone belly up, and most have taxing authority to fall back on, but will continue to pay two to three times as much as a corporation with an exponentially greater risk of bankruptcy, and for that money, they will get a low rating which means they will have to pay more in interest. Which by the way, means we pay higher taxes to cover that interest. So pardon me if I have no sympathy for the poor ratings agencies.
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“So pardon me if I have no sympathy for the poor ratings agencies.”
Ditto
Aren't opinions supposed to be free...
Aren’t the “rating” agencies charging for their services. If so I’d hardly call it an “opinion”.
I wonder if medical malpractice defense strategy can abuse the concept of “it’s just an opinion”.
It’s no surprise that many people have pinned a lot of the blame on the financial crisis on the ratings agencies (mainly Moody’s and S&P). After all, they were the ones who went out there and said that collections of slices of dices of the worst mortgages around should be rated as top notch, sure-fire, investments. And there were clear conflicts of interest in how the ratings agencies did their ratings. But, in the end, the ratings agencies were really just giving an opinion — and opinions are (last we checked) supposed to be protected by the First Amendment.
Mike, let’s put this new legislation aside for a moment.
The above paragraph if nothing else outlines fraud, because a reasonable, knowledgeable person could not assess those assets before them and give them a AAA rating. These agencies told people that shit was gold, and its agreed it was clear there were conflicts in how they rated assets, and this can be shown or proven how could anyone brush this aside and say well they were only giving their “honest” opinion, so they can’t be held responsible in anyway. They made their best guess.
The only way I can see them avoiding blame would be to show that it was impossible for them to drill down deep enough into these CDO’s to even rate them at all, but even then they still rating them AAA so they really couldn’t avoid culpability.
I read your other article you linked to written in Jan. 09, and at least one commenter talked about the difference at least in a business sense (and legal sense at least in Australia),between giving an opinion and giving advice, especially when it’s being paid for as in an financial advisor, or when an entire industry is based largely upon your assessments, in this case the credit rating agencies. Do you agree with that?
Do you feel the rating agencies should be insulated from any blame or consequence because they were merely giving an opinion?
They should face some penalty. I feel alot of the problems and actions of alot of people during this whole ordeal are punishable under our current criminal code without new legislation being passed. I feel though that congress is inside a glass house and no one wants to throw any stones.
Re: fraud
rl78 makes a good point about the willingness of the current government to prosecute the ratings agencies for criminal fraud. It just is not happening.
The other point to note is that prior to this legislation, under the securities laws as currently interpreted by the Supreme Court, ratings agencies were effectively immune from private securities litigation on behalf of bondholders who relied upon those ratings and were defrauded. This legislation makes them liable.
What is also overstated in the original article is the degree of liability. This is not a strict liability statute – ratings agencies are not liable for giving AAA ratings when they “really should have been” AA ratings. But if a rating agency gives AAA ratings to what were effectively junk bonds, then, hell yes, they should be liable, whether its because of a “mistake” or whether it is intentional. Investors rely on these ratings, the ratings agencies make a lot of money off those ratings, and they need to be liable for their ratings.
“You didn’t answer my question. So, in what you say here, it means it’s perfectly fine for the gov’t to censor movies, books and music, because it involves selling a product from a producer to a consumer for a sum.”
there’s a difference between censorship and a stopping some **** who hocks a book telling people eating goji berries cure cancer (only 49.99!). leave it to a republican/democrat/independent to be unable to do anything except stir up controversy by scaremongering. corporations are not people and extending them rights is something the court should undo.
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there’s a difference between censorship and a stopping some **** who hocks a book telling people eating goji berries cure cancer (only 49.99!).
And what is that difference?
I have to contest this...
” Yes, there were massive problems from asset-backed securities, but that doesn’t mean the concept of asset-backed securities themselves are bad. In fact, they can be quite useful.”
I really have to say that I’m hesitant to find out how asset backed securities are truly helpful.
First, Fannie and Freddie were QSEs at the time. They were the worst combination of private enterprise and government. Second, since they were government backed for 50+ years they could wrap a bow around their securities, saying they were good. Third, since the securities were backed by only other securities, it was truly nothing more than a pyramid scheme that led to some fraudulent activity.
In what was could an asset backed security do more than giving a false incentive in housing?
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I am willing to personally rate these investments, while also taking the liability if the investments go bad. But the speculators won’t be happy with my ratings. It’s not going to be the Triple-A Awesome ratings that they were hoping for. Instead, it would be low ratings that hedge for the risk.
This legislation isn’t poorly designed; it is an intended consequence to get those financial institutions who need a high degree of certainty out of unknowable risks. It’s not a bug, it’s a feature.
[soapbox]
I’m sure that investors would love to play with the pensioners’ money, with huge funds to make huge bets, and they don’t want to be personally liable. But then we don’t have the heart to say to the retirees “Sorry, your fund manager lost all your savings, so you get to live on $600.00/month SSI for the rest of your life. Thanks for playing”. And there’s where we get the “too big to fail” mentality and the taxpayers get stuck footing the bill.
Downgrade the ratings on this junk until your ratings agency can’t lose. The laws for certain financial institutions require high ratings because the taxpayers don’t want to bail them out, so they need to abandon this market to other groups or individuals who can take on the risk and are willing to lose big. And afterwards if no one steps up to the plate, then it’s not a useful market, but instead is proof positive that it was just a scam all along to speculate with a larger pool of money by re-rating junk bonds as triple-A. You can’t have it both ways and consider it to be a safe investment even though you can totally lose your shorts, while the big boys aren’t willing to sink their own money into it.
[/soapbox]
I like you Mr. Masnick but I will ask you this.
It is bad to make difficult for people to throw in “opinions” that most likely will be wrong anyway?
People bought and sold those things based solely on faith, now that that faith system is gone people realised they can’t just put money in there and hope for the best.
Is that bad? I don’t see it, but maybe you can enlighten me and others who may not have an economics background.
Yes, some people got scared, and that is the whole point I think, to attract only people who understand the underlying concepts and can create those derivatives in a way that is secure for them creating mechanism that take away those uncertainties if possible, if not do we really think it is a good idea to let the enormous potential for failure go on?
Re: Touch Stove. Get Burned. Avoid Stove.
The real problem is not with mortgages or mortgage backed securities. The problem is that shenanigans caused the entire system to melt down across the board. The last time we had a genuine Great Depression, they enacted controls intended to prevent it from happening again. Certain types like to deregulate everything regardless of the history involved. The end result is pretty obvious.
You take all of the safety features out of the market and something that should have been a little fender bender turns into a near fatal accident.
When you let a caveat emptor mentality to rule in the financial sector, the eventual consequences tend to come with a lot of nasty collateral damage.
“Because [ratings agencies liable if they make a bad guess], the issuance of asset-backed securities has vanished.”
People didn’t want to buy the assets before the new law, because it is too hard to work out what is in the basket being sold. It’s a demand problem, not a supply problem.
looks like financial reform is working to me
the difficulty seems to be that the problem with financial reform is that it prevents business as usual? don’t worry, the banks and the ratings agencies will work out how to sell derivatives, they are highly motivated. they may try to hold up the economy instead of changing but you don’t seem to have any difficulty calling out the record labels on that score.
i’m puzzled by your take on the ‘opinions’ rendered by the rating agencies. suppose you were to consult an attorney who then gave you really (really really) bad advice. do you think she should be able to hide behind the fig leaf of calling that her opinion?
deceptive argument
This article isn’t about all bonds. It isn’t even about “asset-based bonds”. Any corporate bond is asset-based. This article is about derivates: “…bundles of consumer loans such as mortgages and auto loans.” It has nothing to do with other kinds of asset-based bonds. Nice try, though.
Re: deceptive argument
Question? the only place on the page that “asset-based bonds” shows up is your remark. Who are you responding to???
The solution ....
“So, basically, the government requires these ratings be used on these types of financial instruments, but makes the ratings agencies liable if they make a bad guess in doing their ratings. You can understand the reasoning, but no ratings agency can be perfect. It’s really making a guess, and eventually you’re going to make a bad guess. “
The solution for the rating agencies is to go statistical. You do a statistical analysis. Provide your data and your methodology. There is no guess work, there is no opinion. There are only past historical trends. If you can’t rate something because it is to complex, you don’t rate it. 10,000 Bundled loans backed by insurance and other bundled loans … Rated : SPECULATIVE, CC- or lower
This whole solution that the govt came up with is called caution. Its a good thing.
Not everything is protected under the First Amendment
“I really wonder if the part of the law making ratings agencies liable would stand up to a First Amendment challenge.”
This does appear to be the sort of clumsy legislation that we have come to expect from the US Congress. However, I am having a hard time seeing where it becomes a First Amendment issue. To begin with, no one is trying to prevent the ratings agencies from voicing their “opinions.”
Given that the Roberts Court recently decided that corporations have First Amendment rights regarding political speech, it is worth noting that the Citizens United decision did not give corporate entities carte blanche to say anything they want without consequence.
It is also worth noting that not all speech is equal under the First Amendment. Political speech enjoys the highest level of protection. The standard of protection for commercial speech is significantly lower.
If we are going to classify the “opinions” promulgated by these ratings agencies as speech for purposes of the First Amendment, we can be sure that they are not political speech. If these opinions/ratings can be classified as speech under the First Amendment, they would most likely be considered commercial speech.
The Supreme Court has previously protected commercial speech under the First Amendment because of the importance of such speech in the making of well-informed and intelligent decisions as to the allocation of resources in a predominantly free enterprise economy. here, the ratings agencies appear to have been complicit in hindering people from making well-informed and intelligent decisions by obfuscating the actual risk involved with these complex financial instruments.
No one expects S&P and Moody’s to be right all the time, but this is not about a mistake here and there. Having a mechanism by which the ratings agencies can be held liable for making unreasonable determinations of the value of financial instruments seems pretty mundane; e.g., “Wait, they weren’t already liable?”
I think the First Amendment is intact, they can still offer their “opinion” they just can’t make legal use of it to back up something legally and if they do use “opinions” and not facts to back up anything they will face liability. What is not to like?
opinions do not exist when someone is telling you they are certified expert and such. opinions do no count when money is on the line. you are right or you are wrong and if you are wrong. you pay out the arse for it.
First time I disagree with you, Mike...
The three large rating agencies already enjoy a de facto god-like ability to decide what form of investment will be able to survive on the market.
You talk a lot about incentives to create, let’s look at incentives to rate:
Someone, person A, comes up with a new financial product and wants to sell it. Obviously, he needs a rating. He goes to a rating agency X and gets a rating of A.
Person B comes up with pretty much the same thing, but manages to get an AA rating from Y.
B makes more money than A.
-> Incentive for A & B to get the highest rating possible: Very high.
Next time, A will go to X, Y and Z and tell them “I want a rating of AAA or I will get my rating from someone else”.
-> Incentive for X, Y & Z rate highly: Reasonably high; they get to rate, thus get paid.
-> Incentive for X, Y & Z rate realistically: Somewhat; they have no risk and as long as the others do it as well, their reputation well not be hurt too much.
Enter the new legislation.
Suddenly, the incentives for X, Y & Z change dramatically: They are liable for getting it wrong. So they will need to look harder and probably charge more for the rating to make sure _they get it right_. Yes, they will need to factor in something extra in their fees to account for the new risk. If anything, that will create a new incentive, more on that below. So let’s look at the incentives:
-> Incentive for X, Y & Z to rate realistically: Extremely high; they are liable.
-> Incentive for X, Y & Z to rate highly: Very low; the extra earnings can not offset the risks.
-> Incentive for X, Y & Z to become even more efficient at rating correctly: High; they save costs and lower risk.
Now, the beauty of this is that the incentives for A & B are still the same plus an extra:
-> Incentive for A & B to get the highest rating possible: Very high.
-> Incentive for A & B to make their product transparent & easy to rate: High; saves costs.
But all of a sudden, they can’t just shop around for good ratings, any more. They need to do what they are actually supposed to:
Sell high-risk stuff to people willing to take the risk; sell low-risk stuff to people averse to risk.
So what we have now is a free market in which there is an incentive to play (more) fairly as that is where your money is at. Nothing else changes; people are just less likely to cheat.
All the old stuff that used to get AAA but suddenly does not and is thus worthless? Good! That’s how it should have been all along.
To summarize:
If anything, this crisis has taught the big players that it’s OK to go all-in as the public at large will bail them out no matter what. They could win lots and lose nothing.
And while the rating agencies certainly are not the only ones to blame and maybe even do not have most of the blame to take, this new legislation is a strategical masterpiece.
By changing the incentives of one single group of players, you achieve a waterfall effect rippling through most of the financial world. This is an all-too-seldom masterpiece of law-making.
Richard
PS: As a next step, it would be nice if managers were forced to receive bonuses over a time-span of three to seven years with a clause that forces them to pay them back if the company which paid it takes a loss. Talk about incentives to ensure long-term viability over short-term earnings.
I am lost
A rating agency issues ratings. These agencies are supposed to be experts in their field. Their opinions are issued for the specific purpose of being relied upon prior to making investment decisions. If they issue a rating that is relied upon by the public that is false, why shouldn’t the agencies be held liable for it? You screw up, you have to pay. Why are we letting these people get away with it?
If only good mortgages were packaged in these bonds, there would be no issue with AAA ratings on them. Clearly due diligence was not done, bad mortgages were packaged with good ones and they still got AAA ratings. The folks who did these ratings do not deserve to be in business anymore.
when promises are offered for cash. when cash enters the equation thats when you start paying attention
censoring someone who speaks against corruption. BAD!
censoring an asshole selling a fake cure to diseases! good.
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OK, so agree they’re both censorship, that’s good. As long as the censorship is under some clearly-defined law such as fraud, false advertising, or defamation, it can be appropriate.
of course they are both censorship. if we do not have clearly defined limits on the speech of a corporation then we end up with:
bill collectors threatening to blow up your house to frighten them into paying their bill. does threatening your life and home free speech constitute free speech? no.
http://consumerist.com/2010/05/verizon-bill-collector-threatens-to-blow-up-mans-house.html
credit card companies having people arrested. do they have the legal right to have you arrested for a debt of 89 dollars? does this not cause your rights to be violated?
http://www.startribune.com/local/95692619.html
lax laws about the formation of companies allow fake collection agencies to make threatening calls to kill you. does threatening to stab you or to kill you constitute a legal right? nope?
http://cbs11tv.com/local/Threatening.Phone.Calls.2.1760728.html
is a debt collector breaking into your house with a gun and a knife to kill you? really not violating your rights?
http://www.lookatvietnam.com/2009/05/debt-collectors-switch-to-crime-mode.html
to be fair corporations are not people. they are faceless entities that exist in a legal quagmire. a person has the rights guaranteed in the Constitution. the only rights a corporation should have is the right to conduct business honestly & fairly. but because of their legal quagmire status they get away with infringing the rights of the citizens but their rights get protected. when a corporate employee calls you up and threatens you. nobody gets arrested or punished. but if you threaten a corporation then well by god your in prison faster than you can blink
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To be fair… c redit card companies having people arrested and breaking into your house with a gun and a knife to kill you don’t really seem like free speech vs. censorship issues.
if you threaten a corporation then well by god your in prison faster than you can blink
For threatening a corporation? I’m not so sure. As you said, they’re not people, so you can’t threaten them with bodily harm. If you threaten property (like blowing up a building) I could see that getting a quick arrest, but what are you going to do, threaten a corporation’s profit margin? I don’t see any immediate police involvement there.
But as to the larger point about corporations having too much legal protection, and individuals perhaps too little, it’s a good one.