Time Magazine Lays Blame for Crisis on Madoff: How So?

Time Magazine really knows how to cater to the witch-hunt crowd, given their recent 25 People to Blame for the Financial Crisis piece. A funny thing I noticed though. Bernie Madoff is included as one of the top 25... To Blame For the Financial Crisis. The man is a scoundrel, and you can call him a lot of other bad names. But was he really one of the top 25 to blame for the financial crisis? How? Was he even related to it? If anything, it's the financial crisis that helped make his scheme unsustainable, and outed him. Let's see how Time explains his inclusion:

His alleged Ponzi scheme could inflict $50 billion in losses on society types, retirees and nonprofits. The bigger cost for America comes from the notion that Madoff pulled off the biggest financial fraud in history right under the noses of regulators. Assuming it's all true, the banks and hedge funds that neglected due diligence were stupid and paid for it, while the managers who fed him clients' money — the so-called feeders — were reprehensibly greedy. But to reveal government and industry regulators as grossly incompetent casts a shadow of doubt far and wide, which crimps the free flow of investment capital. That will make this downturn harder on us all.

So his guilt is that he revealed government and industry regulators as grossly incompetent. First of all, the fact that he revealed this has nothing to do with being a cause of the crisis. When you blame someone for something, they need to be culpable, i.e. need to be a cause of whatever you are blaming them for. Second of all, if he revealed "government and industry regulators as grossly incompetent", shouldn't we actually be applauding him here? Joking.

Anyway, one would hope that it is pretty obvious Madoff doesn't deserve blame for the financial crisis despite all the other blame he deserves for the separate disaster he created. Nevertheless... Time actually lets people vote on who is most to blame from their Top 25 list. Hilariously, Bernie Madoff has been voted as #13. He beats 12 other nominees, handily beating Sandy Weill, Dick Fuld, Stan O'Neil, and Jimmy Cayne, a group of people, who were, well, at least involved in things that had to do with the crisis. Not sure how this reflects on Time readership. Perhaps people read the article as simply "25 People to Blame" and stopped there.

Comments

[nobby73:]

The idea of trying to pinpoint the individuals responsible is to be expected, people always want faces to put against the crimes, but there were not 25 people, there were thousands, if not millions involved. So many people pushed the system to breaking point - realtors, mortgage brokers, bond salesmen, risk managers, not just the big guys. None of them on their own was to blame, but they ignored the fact that when they sold a bond they knew wasn't as safe as the rating implied, or that the borrower would not be able to keep up with mortgage payments when the teaser rate ended.

In truth, most people in the financial game knew it was all going to end horribly wrong, but they took the gamble they would have made enough by the time it happened they would be safe. People hid behind the security of their models, the rates, the regulatory environment and that is where the blame really lies, the framework was made weak enough to be open to abuses and human nature did the rest of the work.

Jun 30 02:56 AM