The Upside of the Bernie Madoff Affair

Sunday, December 28th, 2008

James Besser in Washington

It’s hard to find anything positive to say about a record-shattering scammer who may have bilked Jewish charities out of hundreds of millions of dollars and shattered Jewish philanthropy by decimating the bank accounts of countless big givers, but there could  be one salutary impact of Bernard Madoff’s mother of all Ponzi schemes: it may force the Jewish world to confront a radically changed economic climate.

For months, I’ve been struck by a kind of whistling-past-the-graveyard attitude from Jewish leaders.

Sure, times are tough right now, they keep saying, but that’s the nature of the economy: there are ups and downs, but this is America, after all, and it won’t take long to get our economy back on track.

Implicit in their response is the notion that while we may be in for an unusually deep recession, the only real difference between the current downturn and all the other post-World War II recessions is an order of magnitude.

So getting through it is mostly a matter of making minor adjustments – in personal finance and in the operation of Jewish groups – and hunkering down for the duration.

More and more, that attitude looks like wishful thinking as cascading crashes – housing, finance, spending, credit, jobs –  suggest something far out of the postwar routine.  Denial may keep our community’s leaders from doing the things they need to do to keep their organizations afloat – and to keep them providing critical services at a time when demand is already soaring.

The Jewish communal infrastructure is built on the community’s preeminent position. That, in turn, is largely a function of a U.S. economy that has been on an upward trajectory,  despite some momentary blips, since the 1950s.  We have an upper crust of the very affluent who think nothing of writing hundred-thousand dollar checks; we have a middle range of contributors who, while not wealthy, have enough money to support multiple causes.

The rich aren’t exactly hitting the streets with tin cups, but the impact of severe meltdowns in housing, finance and industry have radically reduced the wealth of many. The comfortable middle class is starting to fear for its comfort and security for the first time since the 1930s.

What Madoff has done is provide a jolt to a communal network that was slow to face up to the fact they may now confront a harsh new climate in which only the strongest, smartest and most adaptable will survive.

By targeting the richest, Madoff may have shattered the comforting illusion that no matter how much the economy sours, those core big-givers on whom every major Jewish group depends will always be there to pick up the slack.

Madoff losses have already forced numerous organizations and foundations to adopt more professional financial controls and policies instead of the loose, old-boys network that has caused many so much grief in the wake of his alleged scheme, and to start thinking about survival strategies for hard times.

Maybe the current recession will prove to be just that – a recession understandable according to everything we’ve learned in the past 60 years. But there are growing indications it could be something deeper, longer and harder to stop.  In that case, the Jewish organizations that survive will be the ones that adjust quickly and creatively to an environment in which the old verities no longer hold.

That’s a wrenching change to make for groups accustomed to success. Bernie Madoff and his devastating Ponzi scheme may have pierced the attitude of wishful thinking that was keeping many Jewish leaders from making it.

About the Author
Douglas M. Bloomfield is a syndicated columnist, Washington lobbyist and consultant. He spent nine years as the legislative director and chief lobbyist for AIPAC.