Tougher government regulation

The Bernie Madoff case is a good reason you shouldn't have crooks setting the rules. Link.

"Bernard Madoff was the former chairman of the NASDAQ stock exchange and a respected figure on Wall Street for nearly half-a-century. For decades, his firm, Bernard L. Madoff Investment Securities, had been one of the top market makers on Wall Street. In Washington, regulators had sought his advice on any number of regulatory issues over the years.In 2000 he served on a government committee established to protect investors by ensuring accurate and full public disclosure of information to them. In an old video of Madoff that’s come to light, he tells an audience it’s tough to skirt the law.

BERNARD MADOFF: In today’s regulatory environment, it’s virtually impossible to violate rules. And this is something that the public really doesn’t understand. And if you read things in the newspaper and you see somebody, you know, violate a rule, you say, well, you know, they’re always doing this. But it’s impossible for you to go—for a violation to go undetected, certainly not for a considerable period of time."

Madoff Swindle might give some children a chance at life

"By swindling clients out of up to $50 billion, hedge fund manager Bernard L. Madoff has caused at least two left-wing charitable foundations to fold. Through his Social Security-like Ponzi scheme that paid older investors with funds from newer investors, liberal Madoff, a heavy donor to Democratic candidates, has caused the collapse of the Picower Foundation and the JEHT Foundation. Picower gave generously to NARAL, Planned Parenthood, Southern Poverty Law Center, and ACORN affiliate Project Vote. JEHT gave big to the ACLU and its foundation, the Center for Constitutional Rights, ACORN affiliate American Institute for Social Justice, and the Tides Foundation and its affiliates."

But. . . there will be bailouts for those supporting Democratic causes, such as abortion. Welfare for charities.

"Independent Sector, a coalition of liberal charities and foundations, wants to cash in on Washington’s bailout fever, the Chronicle of Philanthropy reports. "There’s simply not enough cash to respond to the amount of the needs," said Diana Aviv, president of the group. "The demand is much greater and the dollars that are secured from traditional sources are shrinking." Call it charity welfare. If you don’t dig deeply enough into your pockets for charity, the government will force you to, or at least that’s what Aviv wants." Capital Research Center

FINRA, Madoff, and Obama's SEC choice

"Mary Schapiro, Barack Obama's choice to lead the Securities and Exchange Commission, previously appointed one of Bernard Madoff's sons to a regulatory body that oversees US securities firms.

It has emerged that in 2001, Ms Schapiro, now the chief executive of the Financial Industry Regulatory Authority (FINRA), employed Mark Madoff to serve on the board of the National Adjudicatory Council - the division that reviews disciplinary decisions made by FINRA.

Last week, Mark and his brother, Andrew, were understood to have approached the authorities after their father apparently confessed to orchestrating a $US50 billion ($70.9 billion) securities fraud.

Bernard Madoff is under house arrest in his $US7 million Manhattan apartment and will be electronically tagged after he failed to secure further signatories to guarantee his $US10 million bail.

Both sons have emphatically denied any involvement in what could be the biggest fraud perpetrated by an individual.

However, the link with Mark may prove controversial for Ms Schapiro and the US president-elect, who has moved fast to replace Christopher Cox, the current head of the SEC.

The watchdog has already come under fire for failing to detect Mr Madoff's activities." Story link here, here, here, here and here.

In my opinion, her useless, ineffective term with FINRA who couldn't catch a thief if they stumbled over him unconscious, is a far more damning recommendation than her appointment of Madoff the Lesser. Makes no difference if she was in like flinn with Reagan and Bush and Clinton. She's much too tainted. FINRA and SEC both have to clean up the family tree and get rid of the incest.

Let's see. Obama's got a Secretary of State with huge financial obligations to the Saudis through her husband's library and foundation. He's got a Chief of Staff with fingerprints all over the Blagojevich appointment scandal. He's got a Secretary of Education that helped Bill Ayers with the Annenberg connection in the failing Chicago schools. Those three he knew about. This one probably caught him off guard. Gary Gensler who spent 18 years at Goldman Sachs, the ones who got a jump start on the bail outs in 2007, was under something in Treasury, he appointed to head Commodities Futures Trading Commission.

Sure is lots of hope and change coming our way folks.

Madoff, Dreier and Blagojevich

Marc Dreier, the big spender and power hungry lawyer, has losses alleged to be $380 million plus a bunch of staff and partners wondering where their next paycheck is coming from (jail?), and the Bernard Madoff Ponzi scheme could be $50 billion, an amount hard to hide, so Rod Blogojevich trying to weasel a paltry $500,000 and a job for his wife looks like small potatoes doesn't it? Plus, the outrageous other stories make Obama a charmed politician again--pushed the criminal activity of the Illinois governor right off the front page. But then, Obama hardly knew him. Helped with his campaign, his staff talked to him recently, but really, he's absolutely clean. All the media say so. And look how they sniffed out all those other stories of corruption! Yah! So much for investigative reporting.

Really, I've never been so discouraged or dispirited with both our government and our greedy, power hungry movers and shakers. It's hard to say which is more corrupt. Who do you trust these days? Certainly not George Bush who has allowed the government to slide into socialism using the economy as an excuse--after he became the all time big spender; and certainly not Barack Obama who will finish the job with his marxist buddies; and not an ex-president who took millions from foreign interests who hope his wife will stroke them; and not scummy Wall Street CEOs buying art collections and mansions, and not the inept union bosses; and not an ex-vice president in business with Hank Paulson to sell phony carbon credits; and not the people we elected who promised so much and then threw it all away; and not the regulators they appointed and hired to see that everything was done right and then didn't notice a thing was wrong despite a ballooning staff and budget. . .

I think we all, especially me, need to apologize to the welfare cheats and illegal, criminal aliens who have been stealing from us for the past 20-30 years. To all the lazy bums we've griped about, my sincere apology. Yes, you screwed up, but you didn't reach for the stars, didn't set high enough goals in your petty crimes. Some of you went to jail, and Dreier and Madoff are out walking around, or on "house arrest." Is that fair? I wish now you were the only crooks we needed to worry about. These small time criminals have allowed our prejudices toward the poor and stupid to take our eye off the rich and smart crooks. I think I can even say the little guy had limited options. But what do you say about the guys who went to Harvard and Yale, who cheated the friends and charities and staff who trusted them, who sat in the pew or synagogue when not jetting around the world, who threw lavish parties, and moved in all the right social circles, who sold the voters down the river, and partied and parceled out the pork 'til they couldn't hold any more?

List of Madoff's Clients, NYT

Scatological and Eschatological

One means obscene--particularly words dealing with excrement, and the other means biblical, "end of the world" and "the last judgment." When people opened the Wall Street Journal and read the front page story about a man named Markopolos who had been warning the SEC about Bernard Madoff for NINE years, there were probably a few choice words both obscene and theological that spewed over the coffee cup. All I said was, "WOW." I don't swear or use the F-word, but if I did, this would have been the day to let loose.

"Securities and Exchange Commission investigators discovered in 2006 that Bernard Madoff had misled the agency about how he managed customer money, according to documents, yet the SEC missed an opportunity to uncover an alleged Ponzi scheme.

The documents indicate the agency had Mr. Madoff in its sights amid multiple violations that, if pursued, could have blown open his alleged multibillion-dollar scam. Instead, his firm registered as an investment adviser, at the agency's request, and the public got no word of the violations.

Harry Markopolos -- who once worked for a Madoff rival -- sparked the probe with his nearly decadelong ..."

So what were their excuses, both the SEC watchdogs and the media watchdogs? Well, it seems we had a bunch of yapping Chihuahuas guarding a pit bull.

No definitive evidence [that's your job--to find it]

Could have been a vendetta [isn't that what they said about the John Edwards' mistress story and bloggers finding the phony CBS Bush documents?]

Occasionally he got facts and dates wrong [like you never do!]

"Once" he misstated a date [sometimes I mix up my kids' birthdates--that doesn't mean they weren't born]

So "Marco Polo" discovers the guy who "Made Off" with the funds and trust of thousands of investors and charities all over the world, and the Security and Exchange Commission headed by Christopher Cox (former Republican congressman appointed by Bush) with a budget of $900 million a year and an enforcement staff a third larger than it was in 2000 can't even follow up on nine years of tips. I think once Cox falls on his sword and takes the blame, this item will be removed from the SEC page.

During his tenure at the SEC, Chairman Cox has made vigorous enforcement of the securities laws the agency's top priority, bringing ground breaking cases against a variety of market abuses including hedge fund insider trading, stock options backdating, fraud aimed at senior citizens, municipal securities fraud, and securities scams on the Internet.

And then there is FINRA, which WSJ says has an even bigger budget than SEC.

"Then there's the Financial Industry Regulatory Authority (FINRA), a "self-regulatory organization" funded by industry. Its 3,000 employees ride herd on the brokerage industry, and these private cops are armed with an even bigger budget than the SEC. FINRA doesn't disclose tips and complaints when they don't result in enforcement action, so we can't know for sure whether FINRA was contacted about the alleged Ponzi scheme." To catch a thief

I realize the op ed page and the news pages of WSJ are different--one conservative the other the most liberal of all news sources in the USA--but just maybe if the journalists hadn't been chasing every positive story they could find about Obama, they just might have turned up this one.

Pot Dodd accuses Kettle Madoff

"The SEC, already faulted in connection with the collapse of Bear Stearns Cos. and Lehman Brothers Holdings Inc., now faces criticism for failing to detect what Madoff termed “a giant Ponzi scheme.” Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, and Senator Charles Grassley, an Iowa Republican, have questioned its vigilance in enforcing securities laws." Bloomberg

And where was Dodd during the banking failures, during the Fannie Mae melt down, during the scummy scammy non-profit housing agencies blackmailing the banks in the name of diverse neighborhoods and multicultural mortgages? We've got the foxhound watching the fox watching the hen house with nary a yelp or growl.

All in the Family

Today a friend was explaining to me an educator's theory (I've forgotten her name) of class and education:

the lower and working class families tend to live for today, without saving a lot, or looking ahead, and they hold their family members very close and rely on family;

the middle class and upper middle class are more goal oriented, they save, they encourage their children to take risks and achieve, and they are less bonded emotionally to their kids and immediate family;

the upper class and extremely wealthy live on past loyalties and connections, and they also hold their values, family and wealth very close.

Watching the Madoff ponzi scheme meltdown and his family ties I think she's on to something. Madoff's niece married a SEC employee, and Walter Noel (Fairfield Greenwich Fund with close ties to Madoff) has 4 or 5 sons-in-laws in the business and they have involved banks and clients for billions around the world--Spain, Brazil, Switzerland, etc.

"The Securities and Exchange Commission plans to probe the relationship between the niece of financier Bernard L. Madoff and a former official at the agency, according to a report in The Wall Street Journal on Wednesday. The probe comes on the heels of an admission by SEC Chairman Christopher Cox that the agency was aware of numerous red flags raised over Bernard L. Madoff Investment Securities LLC, the focus of an alleged $50 billion Ponzi scheme." Market Watch

"In 2002, Vanity Fair dispatched the photographer Bruce Weber to shoot a lavish spread of Mr. Noel’s wife and their five grown daughters at his home in Connecticut (“Golden in Greenwich,” read the headline). That was followed, in 2005, by a Town and Country story on the Noel family’s tropical retreat in Mustique." NYT

Makes you wonder if the glossies will be the next victim of the meltdown, because they follow all the socialites and charity balls. Some charities are closing their doors, and the wealthy aren't answering their phones. In today's WSJ, Holman W. Jenkins, Jr. asked, "When has the SEC ever found a fraud except by reading about it in the newspaper.?" These allegations surfaced in the late 90s, but the SEC never recommended any action. Sort of reminds me of the banking committees in Congress, aka The Barney and Chris Dog and Pony Show. They didn't think there was any problem in the Fannie and Fred housing schemes to back loans to people who couldn't possibly pay it back. Jenkins also suggested that the government, when Madoff makes bail which is tough since the people who could help him are his victims, he be put in charge of Social Security, an even bigger ponzi scheme.

Chart of Madoff losses