Sunday, March 15th, 2009
James Besser in Washington
Just in case you haven’t read enough about mega-swindler Bernie Madoff, check the book-like article about many of his victims in the current Vanity Fair.
Needless to say, most of the victims interviewed are Jewish, and the tales are poignant, like the story of the wealthy physician’s widow who invested with Madoff and ended up working as a kind of maid.
But there’s also something galling in the story: the insistence by some of the victims that the government should make good their losses.
Make good on their decision to invest in a scheme that obviously was too good to be true? Make good on the decision by some to invest all their money in a single fund, not diversify, like you learn in Money Management 101?
Many of us put our money in bank CDs because, while the return is low, it’s guaranteed; the low return is the price we pay for the security of government insurance. Stock market high rollers think we’re chumps, but some of us just don’t like excitement.
Many of these Madoff victims, blinded by dazzling returns and turned dumb by their trust in friends and family members who led them to Madoff like lambs to the slaughter, chose what any sensible person would have concluded was, at best, a risky investment
Should they be bailed out? If the government compensates them for their losses, shouldn’t we also help out people defrauded by those “work from home” schemes, or patent medicine and vitamin scams? I’m sure their personal stories are poignant, too. Maybe we should bail out big losers at the tables in Las Vegas? How about setting up a special branch office of the Treasury Department at a Vegas casino to hand over government compensation to slot machine losers?
I don’t think so.
It’s easy to have sympathy for many of Bernie Madoff’s victims. It’s not so easy to see how their agony merits a government bailout.