I think the math could be corrected slightly for clarity, but the general point still holds I think: the money is not apples and oranges here.

Where does the government get the $100 from? The audit isn't conducted by the government as far as I'm aware, just mandated by them. Correct me if I'm wrong there of course.

> note there are only 100 bucks

That's my whole point: there isn't. The money they accidentally stole from customers (and eventually are now giving back) is different from the money they spent to conduct the audit, regardless of if for any given audit they find money that was misplaced.

> But citi can't run negative as a whole. Its a business, if it didnt make money, it would shut down.

People are acting as if this audit's cost will run Citi out of business, which I would find very hard to believe to be the case. If you actually read my post carefully, I too believe a regulation that causes that is likely flawed.

My whole point is being missed here: some good regulations can cut into profits of businesses and still be worth it from the perspective of the society as a whole. Only once a regulation is so strong of a profit cut that a needed business cannot exist is a regulation likely flawed. Of course, there are many other ways for a regulation to be flawed as well.

> Where does the government get the $100 from? The audit isn't conducted by the government as far as I'm aware, just mandated by them. Correct me if I'm wrong there of course.

Well the bank is not keeping it, and the consumer is not keeping it. So whoever got that money got it because government said they should. They could be independent accountants but for any purposes, the government gave the money to the auditors, being their own or someone elses.

> That's my whole point: there isn't. The money they accidentally stole from customers (and eventually are now giving back) is different from the money they spent to conduct the audit, regardless of if for any given audit they find money that was misplaced.

Thats what you want to believe, but the money they get to spend on the audit all came from customers, they didnt come from the pockets of management. So if you want to believe the money was not taken from customers in this instance, it was in another instance, and now the problem of analysis expands into other areas.

> My whole point is being missed here: some good regulations can cut into profits of businesses and still be worth it from the perspective of the society as a whole. Only once a regulation is so strong of a profit cut that a needed business cannot exist is a regulation likely flawed

Regulations affect company profits in a different variety of circumstances: it depends on the elasticity of the supply. If you put a regulation on ALL banks, then there is no chance in supply, meaning that the consumer bears the entire cost of regulation.

Regulation affects profits of companies, generally by increasing the margin and decreasing the amount, because small companies cannot compete on regulations, the supply decreases, giving big players an advantage.

Remember how they just made it costly to have an account with little money with the bank? That's because it costs money in regulatory compliance. And the bank quickly wants to get their money back or they don't provide the service.

Banks are a special case of market for many reasons, for their capacity to destroy, for their leverage, for their relationship to the government. They have better cases for regulation than most markets. But the original thread made a claim it cannot sustain and i called it out on it.

> Thats what you want to believe, but the money they get to spend on the audit all came from customers, they didnt come from the pockets of management. So if you want to believe the money was not taken from customers in this instance, it was in another instance, and now the problem of analysis expands into other areas.

> Regulations affect company profits in a different variety of circumstances: it depends on the elasticity of the supply. If you put a regulation on ALL banks, then there is no chance in supply, meaning that the consumer bears the entire cost of regulation.

I think that's a fair expansion of scope, but something unmentioned here is that customers are not uniform in benefits received. Paying for the regulation ends up a bit like paying for insurance here - you may pay more this year, but it can save you against anything catastrophic.

> Remember how they just made it costly to have an account with little money with the bank?

Not at all banks by any means. Different banks offer different perks and spread around the cost differently, turning knobs like interest, fees, service quality, etc. There are still a good deal of options in the sector.

> But the original thread made a claim it cannot sustain and i called it out on it.

This has divulged a bit, though in interesting ways, so not without reason, but which claim is false specifically?

>I think that's a fair expansion of scope, but something unmentioned here is that customers are not uniform in benefits received. Paying for the regulation ends up a bit like paying for insurance here - you may pay more this year, but it can save you against anything catastrophic.

That was my point - you need to assess this and then add it to cost benefit analysis. Saying that it's worth it just because caught a random error that amounts to 300M$ is very bad reasoning that can be used to justify very bad legislation. And unfortunately people accept this kind of reasoning from politicians. I expect more from HN.

I never made that argument though. My original post was simply stating that there are regulations that can cost more to the companies than it saves consumers that are still good. A simple "is this profitable to the company" test is not a good measure for a regulation.

> As with your post, this isn't defending all regulations or that specific parent argument, just pointing out that the cost on the company being regulated versus money saved is not a valid metric for deciding if a regulation is needed. The regulation accounts for many more intangibles such as fair customer protections, and again, is not aimed at the value of the regulation for the company being regulated, though a regulation that causes a needed private business to be unprofitable is likely not sound.

Is it profitable to company is irrelevant, is it profitable to the consumer is what matters (including value of risk mitigation)