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Financial Regulators’ Fine Mess

WASHINGTON, DC – When an athlete breaks the rules, it is easy to figure out whether the relevant disciplinary body really wants to discourage repeat offenses. Suspending a player from the sport – as happens in soccer in the case of dangerous fouls – is a real punishment, not only for the individual but also for the team.

Consider the case of Michael Clarke, the captain of the Australian cricket team, who recently threatened bodily harm to an opposing player. Despite public hand-wringing, Cricket Australia (the governing body) imposed only a small fine (that is, small relative to Clarke’s annual salary). Whether or not this was appropriate, Cricket Australia was making it clear that such behavior merited only a symbolic punishment.