Did we learn the real lessons of the Madoff ripoff?
So Ponzi king Bernie Madoff has been sentenced to 150 years, and the blogosphere is aflame with the outrage and anguish of the victims of this record-breaking swindler. While significant recovery seems unlikely for most, there’s a degree of satisfaction that he didn’t get away with the usual wrist-slapping white collar sentence.
But to me some of the case’s most important questions remain unanswered.
Will federal and state agencies, after twenty years of deregulation under Democrats and Republicans alike, take serious steps to ensure future Madoffs won’t have such an easy time of it?
The Securities and Exchange Commission (SEC), charged with protecting the public and safeguarding the nation’s economy, was warned repeatedly about Madoff but did nothing. Regulators at every level were too busy deregulating to pay attention to a guy whoe too-good-to-be-true returns were an obvious tipoff that something was rotten in the state of Madoff.
There’s widespread agreement – outside the right-wing talk show sector – that things have to change, but implementing real change in the face of powerful resistance from business interests won’t be easy.
The Jewish community was economically ravaged by Madoff. Will we be at the forefront of pressing for some serious re-regulation of the financial sector? So far, I see few signs of it.
Secondly, I want to know if the Jewish community is going to get a little more sophisticated in evaluating its own luminaries.
Madoff’s Ponzi scheme worked in part because he effectively exploited his religious and communal identification – a classic “affinity crime.”
He’s one of us, investors seemed to feel, so he doesn’t require the careful scrutiny and skeptical eye we’d apply to other managers of our personal and communal dollars.
Obviously, that was a big mistake. But was the lesson learned? I’m not so sure.