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Richard Cohen's columns have appeared on the op-ed page of The Washington Post since 1984. He joined The Post in 1968 after attending the Columbia ...
Read more about Richard Cohen.
Richard Cohen's columns have appeared on the op-ed page of The Washington Post since 1984. He joined The Post in 1968 after attending the Columbia ...
Read more about Richard Cohen.
Lessons From Bernie
Richard Cohen
In his own telling, Bernard Madoff was a version of the serial killer
who leaves notes saying, "Stop me before I kill again." In Madoff's
case, he was waiting for the Securities and Exchange Commission to ask
him how he took in billions of dollars, never invested any of it and
was reporting steady investment earnings. The answer, it seems, is
that he had accomplices -- the Keystone Kops of the SEC who were
always letting Madoff down: "I wish they caught me six years ago,
eight years ago." So do others.
Madoff spoke those very words last June when he told H. David Kotz, the SEC's inspector general, how he managed to bilk some of American's savviest investors out of billions of dollars. Madoff's scheme was the essence of utter simplicity. He relied on both the kindness of strangers and the stupidity of investigators. It worked brilliantly.
Madoff himself said he was dismayed by his good fortune. In documents recently released, he recounted six separate times the SEC came to him and asked, more or less, "Bernie, how do you do it?" He gave some complicated answers, dropped some names and then waited to be cuffed. All the investigators had to do, after all, was check with Wall Street's central clearinghouse to see that he made no trades at all. "If you're looking for a Ponzi scheme, it's the first thing you do," Madoff told Kotz. It "would've been easy for them to see."
But none of the investigators saw anything. Over and over again the feds acted on a complaint or a tip regarding Madoff and found nothing. It would be reassuring if the IG discovered that some of the investigators were on the take or that Madoff had offered them Wall Street jobs when they grew up. But this was not the case. The investigators were honest -- just blazingly incompetent.
They were also, in their own fumbling way, accessories to Madoff's crime. Each time they cleared him of any hanky-panky, he used it as a recommendation. "When potential investors expressed hesitation about investing with Madoff, he cited the prior SEC examinations to establish credibility and allay suspicions or investor doubts," Kotz told the Senate Banking Committee last September. The IG found that Madoff often volunteered that he had been investigated. Clean as a whistle. No flies on him.
Madoff's face ought to hover in the sky over every Gotham City in our fair land. He represents the failure of a smug ideology and of a stock market so removed from the actual production of wealth that even smart investors had no idea what was going on and instead believed in financial alchemy: Madoff could make gold out of lies. Give the man your money. Let him do his thing -- "Do do that voodoo that you do so well," as Cole Porter might have put it.
But there is another lesson here, and it has to do with those fools at the SEC. It is easy enough, as I have just done, to call them names and conclude that the government cannot do anything right.
Another lesson is more apt. After years of Republicans (and some Democrats) insisting that the market was always right, that it was always self-correcting, that it was both magical and sexy, a manifestation of God and what he intends, and that government, that halitosis-breathed picker of your pocket, could do nothing right, you finally got a government that, at least in this case, actually could do nothing right. Talent went into the private sector, where not only the money was but the prestige as well. The respected public servant morphed into the loathed bureaucrat -- not the solution to any problem, but the problem itself, in the simplistic formulation of Ronald Reagan, whose contributions to the woes of our times have yet to be fully appreciated.
Reading Kotz's testimony is just plain sickening. Lives were ruined. Charitable people were bankrupted and the philanthropies themselves closed their doors. Congress is taking a look at what happened and how it happened -- and it will certainly, as is its wont, blame this or that person or agency. But unless Congress itself is determined to make structural changes, to approach this debacle as the vaunted private sector would and establish a system where talent is recruited and paid well, and where government work is again honored, then it will have learned nothing from the Madoff calamity. Madoff expected more from government. Why shouldn't we?
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Richard Cohen's e-mail address is cohenr@washpost.com
Copyright 2009 Washington Post Writers Group
This news arrived on: 11/03/2009
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Posted Comments:
11-04-2009 23:02
JCE wrote:
My last sentence should have had added "has been very successful." Most of you on here know what the common man thinks about them, even the right that supports them.
11-04-2009 22:58
JCE wrote:
There never was a meritocracy in this country. No where close. The so called republic started to die when the first republican president invaded the south over states rights. We started off as a timocracy(only property owners were part of the government),and has become a plutarchy(combination of plutocracy(rule by the very rich) and oligarchy(rule of the privileged, elite class. Along the way, it has had great shades of kratocy(a term seldom admitted to, or used, meaning groups who are very powerful and cunning take control). This plutarchy is not a benevolent one, however, it is a kleptocratic(basically where the plutocrats use the bulk of the citizenry to feed off of like parasites, keeping them divided and confused, in order to take everything they want). The term kleptomaniac describes the type of plutocrats that we have. Terms like republic, democracy, socialism, and some of the others, are generally labels to describe things that don't really exist outside of books, and dreams. We tried a republic, and a democracy, at least in theory and thru lip service, but they have been failures. The plutarchy, from the point of view of the rulers.
11-04-2009 11:07
Redneck wrote:
BJ, you are right! If only it would work it would save our country! But the communists took over the democrat party about 1971 and I see signs that they have or soon will have the republican party too! Do you notice how the party managers are transfering support to leftists! And abandoning conservatives? To save our country we need new blood! Not an Aristocracy! Lifelong politicans and the positons handed down to their children!!
11-04-2009 11:00
Senior,66 wrote:
the truth....
Right on, JCE...this Canadian agrees with you completely!!
11-04-2009 05:32
bj wrote:
Meritocracy
This country was based on a meritocracy. If you were competent you rose to the top and led the rest of us to success. That was true in all disciplines. Now, we are settling into the dangerous years of a Republic, we are not just complacent, we are paralysed. If we went to school with Jonesie we hire him, the lower classes must be diversity driven but we live in out bubble and manage the money for the advantage of the haves over the have nots and to prevent a total uprising we throw welfare money at the least able of the lower classes. You always need someone's children to fight wars, keep them breeding down there. But we up here are far above those people and we totally believe in our divine right of cashflow. This is the total reason that so many hate Madof. He did nothing but screw the rich instead of the middle class like the rest of the upper classes do.
If you want the country back on track then people have to earn their positions and not have them awarded through any sort of affirmative action and that goes for the Madof class. His only qualification was that he was one of them. And that is the original form of affirmative action.
If you want the country back on track then people have to earn their positions and not have them awarded through any sort of affirmative action and that goes for the Madof class. His only qualification was that he was one of them. And that is the original form of affirmative action.
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