Madoff's Investors Don't Deserve Compensation or Sympathy 97 comments
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The WSJ is issuing more Madoff victim propaganda. It is interesting to see the WSJ advocating free markets while slyly supporting special treatment for rich investors who failed to follow basic financial advice. Remember: Madoff's investors only lost their life savings if they chose to violate Investment 101's cardinal rule: diversify, diversify, diversify.
In a free market, the rich must suffer when they violate basic investing rules. Otherwise, you don' t have a free market. Instead, you end up with two separate systems--one where the rich get preferential rules and use Congress and the IRS as their own personal insurance policies, and another where everyone else has to suck it up when things fall apart.
As I wrote before here, people who invested with Madoff thought they were buying membership into an exclusive club shielded from the vagaries of the stock market. Middle-class investors like you and I could not get Madoff as our financial advisor. Most of us did not even hear about him until the scandal broke. We were barred from Madoff's circle because we weren't rich and we weren't connected with the elite. Meanwhile, Madoff's investors lobbied hard to gain entrance into Madoff's circle and did so because they believed returns were practically guaranteed. Well, it was an exclusive group, all right--a group of connected, rich suckers who thought they were getting a sweet deal unavailable to Main Street.
Perhaps you think me coldhearted. Don't be naive. If it wasn't for the stock market's monumental, once-in-a-lifetime bust, Madoff's investors would have continued making good, safe, and illegal returns year after year. Madoff's investors would have continued playing golf, donating millions of dollars to charities, and hanging out on their yachts while Madoff wormed his way higher in the NASD's upper ranks. In short, Madoff's investors would have been seen as pillars of their community because they knew Madoff. Meanwhile, the rest of us--not having access to hedge funds or Madoff's exclusive circle--would have had to make it on our own the old-fashioned way: by saving our pennies and diversifying our investments (otherwise known as Investing 101).
What's that? You say not all of Madoff's investors invested directly with Madoff? And not all of them were rich? Fine. Go after the mutual fund companies that failed to do due diligence and violated their fiduciary duties to their investors. Last time I checked, mutual fund advisors get paid millions of dollars in fees to do research on suitable investments, not to find secret investment clubs and then spend the week playing golf. Main Street investors rely on mutual fund managers to check investments and make sure everything's on the up and up. Many people--not just Harry Markopolos--knew something was wrong.
Remember: not everyone invested with Madoff. Many people questioned his too-consistent returns, noticed his small, little-known auditing firm, and went the other direction. By bailing out Madoff's investors, we're punishing smart, ethical people like Harry Markopolos and rewarding unethical rich people who begged to be a part of Madoff's club precisely because it used techniques unavailable to Main Street.
First, let's put all of this in perspective: according to the NY Times (6/29/09), $1.25 billion has already been recovered for Madoff's investors. The WSJ (6/30/2009, A1) cites a similar figure:
Mr. Madoff's attorney, Ira Sorkin, said that Mr. Madoff was a "deeply flawed individual" but maintained that most of the fraud money went to other investors. He added that the $13 billion figure cited by the government as the net losses suffered by account holders since 1995 was overstated, since at least $1 billion in recovered assets will be returned to investors, and perhaps a lot more.
In addition to the to $1 billion, the SIPC has already approved almost $200 million for Madoff's investors:
SIPC has mailed out about $142 million in checks to eligible claimants, out of a total of $188.4 million that already has been approved. [See WSJ (Jane Kim, 6/29/2009, C1)]
The above figures don't include the special tax breaks Congress pushed through for Madoff. Oh, you didn't forget, did you? Congress changed the tax rules to benefit Madoff's investors. (Don't you wish we could do that?) If the test of fair capitalism is whether the rich have to suffer when they make mistakes, America is getting a "D" grade--and I'm being a generous grader.
On top of the tax breaks given to Madoff's investors because of their losses, millions of dollars of taxpayer money is being spent on what is essentially a civil fraud matter. Many middle class and poor Americans suffer fraud at the hands of scam artists. When was the last time you saw local D.A.s and the DOJ spending this much time and effort recovering money for middle-class and poor victims? Where are the tax breaks for small businesses going bankrupt because of the ripple effects from the big banks and hedge funds? I am disgusted by the attention given to investors who were either too lazy to follow basic investing rules or so sophisticated, they had access to special investment vehicles. I am also sorry the WSJ is ruining its credibility by portraying all of Madoff's investors as poor, impoverished souls who bear no responsibility for what has happened to them.
There are no shortcuts. Madoff's investors forgot about that. Now they want us to cover their hides because their exclusive club didn't pan out? Sorry, I don't do handouts to rich people or negligent investors--especially not investors who knowingly violate basic investing rules and look for shortcuts unavailable to Main Street. Non-rich people who invested with Madoff through mutual and feeder funds need to look to the banks and insurance companies for recourse, not the taxpayer. You have my sympathy, but don't push it. Get a job and start saving your pennies like the rest of us. And welcome to Main Street. It ain't so bad.
Oh, and for those investors who want a piece of the hedge fund mystique--try the Blackstone Group (BX). I have a hard time understanding their underlying businesses/investments, so I am steering clear.
Disclosure: as far as I know, I don't own any Blackstone (BX) shares.
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This article has 97 comments:
so that's why they will compensate themseftse
Invest in some SIVs, CDOs or ABSs from their big name creators and you also get 0.00 return when the scheme has run it's course. Insurance (credit default swap) is worthless - rating agency assessments are worthless. All these folks also tacitly conspired to perpertrate a fraud. But it's a fraud that has no "face". So nobody goes to jail and the perps get to keep their "bonus" for their participation.
And Citi is still doing it TODAY.
Unfortunately, it's not just WSJ, it's all media, including NPR....
Looking forward to see this article cited on CNN, and other major media...
How can a investment manager be that big and always beat the market? The bigger you get the more your returns start to deviate to the market return.
Great article nice to see that some articles don't bow down the the PC crap.
If the PC police come for you I will stand with you!!!!
Also add at the end of the sentence, "with a wink and a nod."
I was beginning to think I was the only one that thought this way. Thanks for your article.
Second, the Fed and Treasury have TRILLIONS for "structured finance" gangsters who are no less guilty of perpetrating a Ponzi scheme dwarfing Madoff's by several orders of magnitude. Most folks who invested with Madoff were not terribly sophisticated investors. They should be made whole because those whom they believed were watching the hen house were, in fact, in on the fox's wink and a smile.
That the investing public is largely unsophisticated is more than spoken for by your "Investment 101." That compassion is missing in speaking about a fraud whose life should have been ended long ago (because its existence was in all probability known), speaks for the terrible problem America faces when opinion-makers reveal themselves as ripe for fascism.
If only senseless greed were punished more often, perhaps we'd get less of it.
More like -100%.
Our portfolio is largely in retirement funds spread among several entities (IRAs, 401ks, 403bs etc.).
Down the road, if we get an annuity for retirement, I plan on getting them from at least two providers to give a better chance of surviving a provider insolvency.
I only started investing in ETFs late last year after the markets imploded because I wanted to see how they would function in a major downturn before investing in them instead of mututal funds (low expense ratios with long-term managers or index funds from major providers).
These are the types of measures that ll investors should be doing to be able to address the Will Roger's comment "I am more concerned about the return OF my money than the return ON my money."
I don't expect to ask the government for any assistance with this other than basic enforcement of the legal and accounting requirements for major brokerages and mutual fund providers. I look for funds with separate custodians from managers and major accounting firms doing audits. Most of my investments are in index funds which are very difficult to commit fraud in because of the low turnover.
On Jul 01 11:34 AM rdd wrote:
> Great column.
>
> Our portfolio is largely in retirement funds spread among several
> entities (IRAs, 401ks, 403bs etc.).
>
> Down the road, if we get an annuity for retirement, I plan on getting
> them from at least two providers to give a better chance of surviving
> a provider insolvency.
>
> I only started investing in ETFs late last year after the markets
> imploded because I wanted to see how they would function in a major
> downturn before investing in them instead of mututal funds (low expense
> ratios with long-term managers or index funds from major providers).
>
>
> These are the types of measures that ll investors should be doing
> to be able to address the Will Roger's comment "I am more concerned
> about the return OF my money than the return ON my money."
>
> I don't expect to ask the government for any assistance with this
> other than basic enforcement of the legal and accounting requirements
> for major brokerages and mutual fund providers. I look for funds
> with separate custodians from managers and major accounting firms
> doing audits. Most of my investments are in index funds which are
> very difficult to commit fraud in because of the low turnover.
And of course it's their own fault if they put every penny with Madoff - but I would be really pissed at the SEC if I were them. If your brokerage goes belly up, but you can't get money from the SIPC because it wasn't even a brokerage in the first place, I would be pretty angry, too.
I agree, though, that their greed at belonging to an exclusive club probably clouded their judgment, making them think they are somehow super shrewd investors; we all do that. We just don't all dump our money into one guy's hands.
And of course there is little or no precedent for this. After all, did the ENRON retirees get compensation for the rape of their assets? In many cases their loses were at the hands of programs they had little control over.
But - the moral problem in this case is the failure of the SEC - they are supposed to provide some form of protection against the ultimate form of risk that occurred in this case - complete fraud. While the investor must be responsible for his actions, and the reliability of his choices is it completely reasonable for the investor to factor in the mis, non and malfeasance of the SEC in this case? Since the SEC failed in this case, should they not be liable too?
Of course the problem is that liability of the SEC devolves to the taxpayers - and this they become the ultimate payers. So why should taxpayers pick up the bill for this? SEC regulation doesn't come with a guarantee against fraud, only some (weak it seems) attempt to minimize it.
So ultimately I think that Madoff's victims should not be compensated. There is no precedent for it, and even the strongest point in their favor, that the failure of the SEC is not a normal risk factor, does not rise to the level that justifies the establishment of a new public entitlement as there is no guarantee the SEC will be infallible in preventing market risk of this sort.
So you are willing to abrogate the coverage every single person, not just wealthy, get when you have your funds held by a brokerage firm because these investors were defrauded or they violated a diversification rule? (This is a lame argument, by the way, as if to say having your assets in one custodian means you aren't diversified? Doesn't the underlying selection of assets signify diversification? Or do you expect investors to open a different brokerage account at a different firm for each asset purchase to be "diversified" using your definition?)
Shame on you. These investors are not getting a nickel above and beyond SIPC and what little can be recovered. I think you need to ask the question: If my brokerage firm failed due to a fraud, would I want to be covered under SIPC? Of course. Or would you be writing this article then too? These investors deserve the same, nothing more, nothing less.
You forgot to add that many of these "victims" are now angry that they are only receiving their principle investment back and not the bloated balance that Madoff printed on their statements. That's the type of people your dealing with here.
Do we all get our money back for the failure of the govt to control the selfish corruption of the banking industry also?
This link needs to be posted to all the social bookmarking sites as a counterbalance to the media's biased take on this issue.
No public money should go to any investor. Its was their risk.
On Jul 01 09:38 AM Longinvestor wrote:
> Madoff had a reputation and credentials in the Financial Market to
> manage other people's money. And he stands convicted of criminal
> Fraud, not poor investment advice. The victims deserve full protection
> of law...and the rest of us investors deserve a better, earlier,
> timely, enforcement of the laws designed to protect us from Fraud.
or that they can only deduct from the IRS their principle balance as opposed to the Madoff statement amount.
Besides that, the whole market is a Ponzi scheme anyway. First in wins and last out loses just the way Madoff's system worked. Giving your money to anyone is a huge risk and I shouldn't have to pay for your loss as a taxpayer especially when you think you have a special "class" advantage over my ability to invest profitably.
On Jul 01 09:38 AM Longinvestor wrote:
> Madoff had a reputation and credentials in the Financial Market to
> manage other people's money. And he stands convicted of criminal
> Fraud, not poor investment advice. The victims deserve full protection
> of law...and the rest of us investors deserve a better, earlier,
> timely, enforcement of the laws designed to protect us from Fraud.
On Jul 01 01:16 PM suhas katti wrote:
> Madoff scam validates the well known cliche" there's a sucker born
> every minute" . It was quite unnerving to observe that so-called
> " intelligent investors" failed to notice the facade behind super
> profits by Madoff.
Of course I am sure you would have been astute enough to recognize it as a sham instantly, unlike the thousands who were scammed. Unfortunately, everyone is not endowed with your vast intellect.
On Jul 01 01:06 PM mwfall wrote:
> "How the hell is a widow supposed to evaluate the attractiveness
> of investment alternatives,..."
>
> gee i don't pinbrain. maybe the same way every one else does.
On Jul 01 09:32 AM Ferdinand E. Banks wrote:
> Interesting and well written article, but I question its logic. The
> rich, nearly rich, and soon-to-be-rich have always gotten the best
> seats at the American table. Always have and always will. To think
> otherwise is to doubt the American way.
Only time will tell, whether new congressional regulations (in progress?) will provide any better protection for Mainstreet America. In the meantime, however, the culprits at the Bush SEC must be held accountable for justice and to mitigate against more brazen abuse.
Last time I checked my passport, it says "...that Government of the People, by the People, for the People shall not perish." Alas, trillions and lots People's livelihoods have indeed perished and much more fallout to come. Isn't it time we the People take our Government back? Abe Lincoln and your Whitehouse successor/fan from Springfield, help us if you are listening!
Second, regarding the Fed & Treasury Trillions, which many in the public greatly question, those funds were primarily to go to public companies that would have a negative impact on the total general public at large. We all a working bank system to survive.
Still we question how and who these funds went to. And we expect to get most if not all of the funds back at some time. A major difference here vs helping out the Madoff investors.
So it seems obvious that many here disagree with your position.
On Jul 01 10:35 AM RiskAverseAlert wrote:
> First, "Diversification" is NOT "Investment 101." Read Gerald M.
> Loeb's "The Battle for Investment Survival." Let someone who lived
> through the Crash of '29 and subsequent bloodbath correct this bit
> of misinformation. You want to talk "propaganda?" The "balanced and
> diversified" mantra is it.
>
> Second, the Fed and Treasury have TRILLIONS for "structured finance"
> gangsters who are no less guilty of perpetrating a Ponzi scheme dwarfing
> Madoff's by several orders of magnitude. Most folks who invested
> with Madoff were not terribly sophisticated investors. They should
> be made whole because those whom they believed were watching the
> hen house were, in fact, in on the fox's wink and a smile.
>
> That the investing public is largely unsophisticated is more than
> spoken for by your "Investment 101." That compassion is missing in
> speaking about a fraud whose life should have been ended long ago
> (because its existence was in all probability known), speaks for
> the terrible problem America faces when opinion-makers reveal themselves
> as ripe for fascism.
- suhas katti
On Jul 01 01:30 PM Neal H. Levin wrote:
> They didn't fail to notice it...they were greedy. That is why the
> Trustee is suing many of the investors who in fact knew better than
> to believe that this was a legitimate investment vehicle.
Also, I expect to see a suit against the regulators who should have to answer for the paper trail they ignored from Markopolos. Not only is Madoff liable, but so should be the negligent regulators.
This was a failure of individuals, not the system.
On Jul 01 10:35 AM RiskAverseAlert wrote:
> First, "Diversification" is NOT "Investment 101." Read Gerald M.
> Loeb's "The Battle for Investment Survival." Let someone who lived
> through the Crash of '29 and subsequent bloodbath correct this bit
> of misinformation. You want to talk "propaganda?" The "balanced and
> diversified" mantra is it.
>
> Second, the Fed and Treasury have TRILLIONS for "structured finance"
> gangsters who are no less guilty of perpetrating a Ponzi scheme dwarfing
> Madoff's by several orders of magnitude. Most folks who invested
> with Madoff were not terribly sophisticated investors. They should
> be made whole because those whom they believed were watching the
> hen house were, in fact, in on the fox's wink and a smile.
>
> That the investing public is largely unsophisticated is more than
> spoken for by your "Investment 101." That compassion is missing in
> speaking about a fraud whose life should have been ended long ago
> (because its existence was in all probability known), speaks for
> the terrible problem America faces when opinion-makers reveal themselves
> as ripe for fascism.
Couldn't agree more
www.azstarnet.com/sn/b...
Did we all get compensated when the market crashed 2000-2003 ?
Hell No !
Lin
Furthermore, claiming that Madoff investors are being shafted by the system only serves to prove Matthew's argument: there are two sets of standards in place. And no, everyone who talks about the double standard is not naive; we all "get it", but that shouldn't preclude someone like Matthew from speaking the truth.
People tried for over 9 years to get the Feds off their butts to do their job and investigate Madoff.
The “Feds” wouldn’t budge.
The “Feds” are lazy, incompetent, and that’s on a good day.
The Lawyers for the Feds, like in the Justice Department are also lazy, incompetent and third rate lawyers on a good day.
There aren’t that many good days.
I myself had dealings with the Feds.
We had a RICO case. They said they would file it for us. They took it, and didn’t do a damn thing.
We even got a phone call from John Ashcroft’s office when he was the US Attorney General. That's how high it went.
They did nothing.
We had 108 pages of pleadings from postal crimes, to interstate commerce.
So, I have no sympathy for these investors.
All they say was the “bright lights” and a “fast buck.”
AND NOW WE’RE SUPPOSED TO BAIL THEM OUT?
NO ONE FROM THE GOVERNMENT VIS-À-VIS FEDS BAILED US OUT.
Like the FBI told us, “WE FEEL YOUR PAIN….”
It would have been more heart felt if they said to us, “LET THEM EAT CAKE….”
On Jul 01 12:29 PM EJL wrote:
> This is a terrible premise to say that the defrauded investors should
> not get the compensation that would be available to any client rich
> or poor of any brokerage firm if that firm failed: SIPC.
>
> So you are willing to abrogate the coverage every single person,
> not just wealthy, get when you have your funds held by a brokerage
> firm because these investors were defrauded or they violated a diversification
> rule? (This is a lame argument, by the way, as if to say having your
> assets in one custodian means you aren't diversified? Doesn't the
> underlying selection of assets signify diversification? Or do you
> expect investors to open a different brokerage account at a different
> firm for each asset purchase to be "diversified" using your definition?)
>
>
> Shame on you. These investors are not getting a nickel above and
> beyond SIPC and what little can be recovered. I think you need to
> ask the question: If my brokerage firm failed due to a fraud, would
> I want to be covered under SIPC? Of course. Or would you be writing
> this article then too? These investors deserve the same, nothing
> more, nothing less.
I am also bothered that our government is spending so much time prosecuting Madoff when more urgent matters exist, especially ones that affect all taxpayers. When was the last time you saw the government move so quickly on issues that primarily impact middle-class and poor Americans?
Re: the aiders and abettors, i.e., Congress and the Exec. Br. putative "regulators." A recent "Playboy" observation captured things well, to wit, "Congress should wear uniforms like NASCAR drivers so we can (better) tell who their sponsors are."
On Jul 01 08:42 AM pchurch wrote:
> Amen Matthew, nice article. anyone who puts all their eggs in one
> basket, especially a basket such as Madoff where returns dont relate
> to common sense gets what they deserve: a big smack-down..feel sorry
> for single working mothers or starving children in Africa, not madoff
> investors...
The SEC should also be held responsible for their total lack of following through on all the red flags they were offered.
You are also right that if the market hadn't crashed, this crime and stupidity on the part of the investors, would have gone on and on.
Well done in having the courage to write what you believe!
There is no doubt in my mind that Madoff is a truly bad person, committing a financial Holocaust in his victims. I also think that if it is too good to be true, it is not true!
If these investors had been the little people, nothing would be done for them, it is the type of powerful people who were tricked that has made it so big and that is very sad. Good, ordinary people get swindled every day, and no one cares, and they never get compensated.
All the fees made by the investment houses and Hedge Funds should be returned, as these men or women, did not do their jobs, so why should they be compensated. Their compensation came out of the investments they made for their clients which were not investments as he never traded, how could they get away with what they did?
On Jul 01 10:35 AM RiskAverseAlert wrote:
> First, "Diversification" is NOT "Investment 101." Read Gerald M.
> Loeb's "The Battle for Investment Survival." Let someone who lived
> through the Crash of '29 and subsequent bloodbath correct this bit
> of misinformation. You want to talk "propaganda?" The "balanced and
> diversified" mantra is it.
>
> Second, the Fed and Treasury have TRILLIONS for "structured finance"
> gangsters who are no less guilty of perpetrating a Ponzi scheme dwarfing
> Madoff's by several orders of magnitude. Most folks who invested
> with Madoff were not terribly sophisticated investors. They should
> be made whole because those whom they believed were watching the
> hen house were, in fact, in on the fox's wink and a smile.
>
> That the investing public is largely unsophisticated is more than
> spoken for by your "Investment 101." That compassion is missing in
> speaking about a fraud whose life should have been ended long ago
> (because its existence was in all probability known), speaks for
> the terrible problem America faces when opinion-makers reveal themselves
> as ripe for fascism.
If an investor gave Madoff 1 million, and was told that this had turned into 2 million over the years, are they claiming that they lost 2 million, or the 1?
Was this a 50 Billion dollar scheme or a 20 Billion dollar scheme?
On Jul 01 01:06 PM mwfall wrote:
> "How the hell is a widow supposed to evaluate the attractiveness
> of investment alternatives,..."
>
> gee i don't pinbrain. maybe the same way every one else does.
-Mark
On Jul 01 09:32 AM Ferdinand E. Banks wrote:
> Interesting and well written article, but I question its logic. The
> rich, nearly rich, and soon-to-be-rich have always gotten the best
> seats at the American table. Always have and always will. To think
> otherwise is to doubt the American way.
Instead, they got clipped by a dangerous con man, and their money was essentially stolen. That is a real tragedy for them on a personal level, as is any crime victim's loss.
This investment profile is deeply flawed in so many ways, however, that it is hard to know where to begin. If you think you are in on some sort of secret scheme to extract money from the markets through illegal or shady means, then shame on you. If you put millions into Uncle Bernie's Ponzi scheme without bothering to check on obvious things like -
a) Where were the trade confirms from the other side of the fake trades?
b) Why did he have a joker auditor firm instead of a major firm? (I'll ignore the question of what a joke most of the major auditing firms are for another day)
c) Why was everything such a secret, with Bernie refusing to answer basic questions when potential investors came in for basic DD?
d) How were the returns so amazingly consistent, regardless of volume, market direction, interest rates, etc.?
e) Why would Bernie be motivated to share these illicit, magical gains, anyway?
f) Why were the statements frequently filled with trades that, upon simple examination, didn't correspond to market prices or volumes?
g) Why were the returns non-reproducable by anyone else who was examining the situation and attempting to validate Bernie's methods?
...then shame on you. Shame, shame, shame, and stop whining!
I'm not the most diversified investor, and I don't mind having 20% of my funds in one really good idea, or a very compelling sector bet, like long oil & gas producers in 2004, or short homebuilders in mid-2007 - but that's about as far as I go - putting 100% in to a hedge fund - which is what Bernie was running - is a total joke, and they are getting what they deserve for that huge mistake. The hedge fund world is crammed full of fraudsters, phony audits, and assorted criminal activity. Or don't you read the papers?
Yes, Bernie is a scumbag and it's too bad they lost a ton of money, but they were reckless and greedy, and it's certainly not the government's business to bail out suckers, rich or poor. As they say in Honduras - tough bananas.
They should sue the crap out of all the feeder funds and the shady characters who run them - I'd love to see the Courts go after some of these jokers who are shuffling money around, and lying to investors about DD and the consistency of returns - based on huge kickbacks from the managers. It's a pretty sordid business, and now the rotten side has been partially exposed. There's a lot more rot there, but again, that's for another day.
The Madoff 'victims" are lucky the SPIC is covering them - even that's pretty questionable - and to ask for more from the government is the height of vulgar greed.
However, in some cases, which I know of personally, the investors were there for so long, that the many years of fraudulent taxes paid may very well have exceeded the original investment (which should be the limit of what can be recovered and not the subsequent non existent growth, i.e. I may have lost 10 million, but I only invested 3 million 15 years ago, so i should only be entitled to receive up to 3 million back between tax refunds, SIPC, and recovered assets). This seems like a fair way to approach it, regardless of whether you invested $100k through a feeder or $100 million directly.
The government has the responsibility to prosecute such a fraudster, so I'm not of the opinion that these efforts are wasted (although I truly believe a slow death is the correct punishment - we don't need this type of person anywhere in our society). Let's be careful when talking about how this affects all tax payers. Why? If the government did nothing now, why would any taxpayers want to get involved with capital markets or capital formation, two very important functions in a capitalist society (even in one with socialist tendencies!)
The last time I saw the government hurry to help all taxpayers were these ridiculous bailout packages they rushed to sign last fall. Was that a good idea? Maybe, maybe NOT. My point is that haste isn't the answer. A more pragmatic approach would be nice, but when congress is so interested in getting re-elected, the best long term policies are often replaced with short term feel good policies. Where is the short term sacrifice for long term health in our institutions? This is what we need now to remind ourselves of what made this country great, hard work and sacrifice, not leverage and outwardly focused blame.
On Jul 01 08:59 PM Matthew Rafat wrote:
> EJL: I don't mind Madoff investors getting SIPC funds--the SIPC is
> funded by member broker-dealers, not taxpayers. Above all, the special
> tax breaks bother me, as well as the speed by which Congress changed
> tax laws to benefit Madoff's investors.
>
> I am also bothered that our government is spending so much time prosecuting
> Madoff when more urgent matters exist, especially ones that affect
> all taxpayers. When was the last time you saw the government move
> so quickly on issues that primarily impact middle-class and poor
> Americans?
On Jul 01 09:32 AM Ferdinand E. Banks wrote:
> Interesting and well written article, but I question its logic. The
> rich, nearly rich, and soon-to-be-rich have always gotten the best
> seats at the American table. Always have and always will. To think
> otherwise is to doubt the American way.
On Jul 01 10:35 AM RiskAverseAlert wrote:
> First, "Diversification" is NOT "Investment 101." Read Gerald M.
> Loeb's "The Battle for Investment Survival." Let someone who lived
> through the Crash of '29 and subsequent bloodbath correct this bit
> of misinformation. You want to talk "propaganda?" The "balanced and
> diversified" mantra is it.
>
> Second, the Fed and Treasury have TRILLIONS for "structured finance"
> gangsters who are no less guilty of perpetrating a Ponzi scheme dwarfing
> Madoff's by several orders of magnitude. Most folks who invested
> with Madoff were not terribly sophisticated investors. They should
> be made whole because those whom they believed were watching the
> hen house were, in fact, in on the fox's wink and a smile.
>
> That the investing public is largely unsophisticated is more than
> spoken for by your "Investment 101." That compassion is missing in
> speaking about a fraud whose life should have been ended long ago
> (because its existence was in all probability known), speaks for
> the terrible problem America faces when opinion-makers reveal themselves
> as ripe for fascism.
On Jul 01 02:29 PM martyg wrote:
> painting everybody with the same brush, in this swindle, is as disingenuous
> as can be conceived.
>
> your 89 year old mother and 92 year old father should be now living
> with you due to the loss of their life's savings. and there is a
> difference between losing $200,000, your total savings, or $10,000,000
> that can be managed. and the stupidity assertions you make are the
> work of a self centered talentless egotist who can't spell.
> ---mr matthew arafat.
>
> if you believe this is a personal attack then you are correct, despite
> the fact that it will bounce off your selfish brain.
On Jul 02 12:45 PM searcher wrote:
> See "user396040". Common sense with little 'attitude'. Does the Ponziist
> have a vision of the 'endgame'? Most of us would expect this type
> of situation to arise out of an effort by the 'custodian' to retrieve
> investment positions gone sour. In Madoff's case there was never
> an investment made other than to a cash vehicle. It was Ponzi from
> the get go. Looks like it was a headsup eyes wide open straight trade
> of the hereafter for the hereandnow. This is what one of the faces
> of evil looks like.
"Walker-Lightfoot, a lawyer in the SEC's Office of Compliance Inspections and Examinations, sent emails to a supervisor saying information provided by Madoff during her review didn't add up and suggesting a set of questions to ask his firm, the report said. One of Walker-Lightfoot's supervisors on the case was Eric Swanson...Swanson later married Madoff's niece."
Here are some quick responses to the comments above:
1. Someone wrote, "If you were one of those who lost a lifetime's savings, your article would have a slightly different sentiment." Perhaps you are right; however, I diversify my investments and I buy investments available to the public. I do not and cannot invest in hedge funds or other non-transparent clubs.
2. Two people have criticized my grammar and spelling--please point out specific mistakes. One person wrote that "investors like you and I could not get Madoff" should have been written as "investors like you and me..." I disagree, but I will check my Strunk and White manual later.
3. An anonymous person implied that I would feel differently had Madoff's investors been of a different religion, more specifically Islam. That's the kind of irrelevant, divergent thinking that Madoff's investors want to avoid if they want any chance of sympathy. People are upset because of perfectly rational factors:
a) Madoff's investors should have diversified their investments;
b) Madoff's investors are receiving special treatment from the government in the form of special tax breaks (paid for by general taxpayers) and more-than-usual government resources;
c) Madoff's investors are seeking to portray themselves as poor widows when most of them are probably still more affluent than 95% of Americans (take a look at Madoff's client list, and you'll see many trusts, private banks, foundations, corporations, and LLCs);
d) most Madoff investors would not have invested heavily with Madoff unless they believed he had an unfair edge or special connections unavailable to the public investor;
e) Madoff's investors believed Madoff was using investment strategies unavailable to the general public (they were right--it just wasn't the strategy they expected);
People are also upset because they see a fundamental shift in values. In the old days, the rich believed they had a duty to do public service. They recognized that capitalism necessarily results in winners and losers, and the government could not solve the problems of vast inequality and disparate opportunities by itself. Look at Theodore Roosevelt, John D. Rockefeller, Jr., and John Pierpont Morgan. It's hard to remember now that JP Morgan bailed out the federal government, but it really did happen.
I'm not saying all rich persons have lost their moral compasses. Eli Broad, Warren Buffett, Ted Turner, and Bill and Melinda Gates are doing wonderful things, but most of us work hard every single day and will probably never be worth millions of dollars, or even one million dollars.
Most of Madoff's investors got to the financial promised land and squandered their chance at permanent retirement. They did so voluntarily--no one forced them to violate basic investing rules and to invest heavily with Madoff. Thus, it is hard to stomach the general media's sympathetic coverage of Madoff's investors when so many Americans are homeless, out of work, and live paycheck to paycheck.
The material is good. You shouldn't feel compelled to defend it particularly from a twit who questions what your faith has to do it.
These people are like the drunk driver who after many successful runs hits a telephone pole and wants the insurance company to replace the car.
On Jul 02 02:12 PM Matthew Rafat wrote:
> From Reuters: news.yahoo.com/s/nm/20...
>
>
> "Walker-Lightfoot, a lawyer in the SEC's Office of Compliance Inspections
> and Examinations, sent emails to a supervisor saying information
> provided by Madoff during her review didn't add up and suggesting
> a set of questions to ask his firm, the report said. One of Walker-Lightfoot's
> supervisors on the case was Eric Swanson...Swanson later married
> Madoff's niece."
>
> Here are some quick responses to the comments above:
>
> 1. Someone wrote, "If you were one of those who lost a lifetime's
> savings, your article would have a slightly different sentiment."
> Perhaps you are right; however, I diversify my investments and I
> buy investments available to the public. I do not and cannot invest
> in hedge funds or other non-transparent clubs.
>
> 2. Two people have criticized my grammar and spelling--please point
> out specific mistakes. One person wrote that "investors like you
> and I could not get Madoff" should have been written as "investors
> like you and me..." I disagree, but I will check my Strunk and White
> manual later.
>
> 3. An anonymous person implied that I would feel differently had
> Madoff's investors been of a different religion, more specifically
> Islam. That's the kind of irrelevant, divergent thinking that Madoff's
> investors want to avoid if they want any chance of sympathy. People
> are upset because of perfectly rational factors:
>
> a) Madoff's investors should have diversified their investments;
>
>
> b) Madoff's investors are receiving special treatment from the government
> in the form of special tax breaks (paid for by general taxpayers)
> and more-than-usual government resources;
>
> c) Madoff's investors are seeking to portray themselves as poor widows
> when most of them are probably still more affluent than 95% of Americans
> (take a look at Madoff's client list, and you'll see many trusts,
> private banks, foundations, corporations, and LLCs);
>
> d) most Madoff investors would not have invested heavily with Madoff
> unless they believed he had an unfair edge or special connections
> unavailable to the public investor;
>
> e) Madoff's investors believed Madoff was using investment strategies
> unavailable to the general public (they were right--it just wasn't
> the strategy they expected);
>
> People are also upset because they see a fundamental shift in values.
> In the old days, the rich believed they had a duty to do public service.
> They recognized that capitalism necessarily results in winners and
> losers, and the government could not solve the problems of vast inequality
> and disparate opportunities by itself. Look at Theodore Roosevelt,
> John D. Rockefeller, Jr., and John Pierpont Morgan. It's hard to
> remember now that JP Morgan bailed out the federal government, but
> it really did happen.
>
> I'm not saying all rich persons have lost their moral compasses.
> Eli Broad, Warren Buffett, Ted Turner, and Bill and Melinda Gates
> are doing wonderful things, but most of us work hard every single
> day and will probably never be worth millions of dollars, or even
> one million dollars.
>
> Most of Madoff's investors got to the financial promised land and
> squandered their chance at permanent retirement. They did so voluntarily--no
> one forced them to violate basic investing rules and to invest heavily
> with Madoff. Thus, it is hard to stomach the general media's sympathetic
> coverage of Madoff's investors when so many Americans are homeless,
> out of work, and live paycheck to paycheck.
What irks me is that the media reports the Madoff had a $50 billion fraud scheme. As I suspected, much of that was returned to investors. For instance, if you originally invested $1m and over time your account rose to $2m (fraudulantly) and you withdrew the first $1m, did you really lose $1m? If you withdrew $2m and left the fund, should your assest be attached because you were a beneficiary of the fraud?
Similarly, during the Enron scandal, I saw an interview with a man who 'lost' $100,000 of Enron stock in his 401K. Well, he probably paid $5,000 (or maybe even less - maybe it was all given to him as matching) for that stock and the rest he made as Enron stock went up because of the fraud. I claim he lost $5,000 not $100,000.
Well put. This is thinly-veiled anti-Semitism cloaked in a hate-filled pseudo-academic soliliquy. Nice try.
Mmhmm. This is just thinly veiled anti-Semitism cloaked in a hate filled pseudo-academic soliliquy. Nice try.
willworkforjustice.blo...
Pandit in my view is symptomatic of the whole disease, and should be shot. His hedge fund was only based upon buying bonds with cheap leverage. You were in fact just buying with good money nothing. It blew up, he made hundreds of millions and became head of citit.
Now the fed is attempting to make credit cheap again so wall street can do it once more.
On Jul 01 09:31 AM stfree wrote:
> Invest with Madoff and you get 0.00 return when the music stops.
> It was a fraud so he goes to jail and his assets are stripped. OK
> so far.
>
> Invest in some SIVs, CDOs or ABSs from their big name creators and
> you also get 0.00 return when the scheme has run it's course. Insurance
> (credit default swap) is worthless - rating agency assessments are
> worthless. All these folks also tacitly conspired to perpertrate
> a fraud. But it's a fraud that has no "face". So nobody goes to
> jail and the perps get to keep their "bonus" for their participation.
>
>
> And Citi is still doing it TODAY.
That said, too bad.
There should be recourse in civil courts against the SEC personelle who were presented a compelling case to look into Madoff and did nothing.
Madoff gave a lot of money to high level politicians. It would be good to know, under oath, if anyone at the SEC was disuaded from pursuing Madoff by any of our elected officials.