Missing the point on Madoff

Charles Ferguson (why no hyperlink to the name? does he have commercial interests or connections that the Guardian may be ashamed of promoting?) writes in the Grauniad on the Madoff Ponzi scam and why he thinks major banks should be prosecuted for staying schtumm.

I particularly treasured:

But suppose a senior executive at Goldman Sachs, UBS or JPMorgan Chase had called the SEC and said: "You really need to take a close look at Bernard Madoff. He must be working a scam."
But not a single bank that had suspicions about Madoff made such a call. Instead, they assumed he was probably a crook, but either just left him alone or were happy to make money from him.
Just suppose the bank had made such a call. Can you imagine the opprobrium, court cases and financial damages had they been wrong? (or unable to prove themselves correct, which is much the same thing in a libel trial). And what benefit would accrue to them for such whistleblowing? Staying quiet and refusing to deal with Madoff was the least worst option for them.

Instead, Charles, let's talk about the complete dysfunction of Mary Schapiro's SEC that allowed Madoff to operate for over a decade despite widespread misgivings in the financial industry. What the heck was the SEC doing? How did it totally fail to detect Madoff's too-good-to-be-true results and draw the obvious conclusion? It isn't as if this was a tiny fund in Podunk, NY beneath the SEC's radar. Madoff ran a huge hedge fund. What was the SEC doing when it was "regulating" this fund where investors lost $50bn?

Charles Ferguson, blinkered moron that he is, completely misses the actual culpable idiots in the SEC in his pursuit of the "big banks". Charles: the big banks were merely responding rationally in the environment that civil litigators and the SEC created. Whose fault is that?

No comments:

Post a Comment

All comments are subject to retrospective moderation. I will only reject spam, gratuitous abuse, and wilful stupidity.