It continues to be a popular story line that Bernard Madoff swindled as much as he did because the Securities and Exchange Commission employed a bunch of bumblers, kind of like a financial gaggle of Inspector Clouseaus. See, e.g., Diana B. Henriques, "Lapses Helped Scheme, Madoff Told Investigators" (New York Times Online, Saturday, October 31, 2009). There is an alternative story line.
It is much closer to the truth that during the rapidly fading period from 2001-2008, the S.E.C. was populated by political patronage, period. There was little if any obvious thought given to competence. (Read: Not just F.E.M.A.) A lot of thought and instructions were given, in contrast, to nonenforcement of the law and nonregulation of the people and businesses involved in Securities. That is what happened. Then came Madoff.
The end, we pray.
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