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Water Cooler – Madoff Says From Prison “Banks Had To Know”

Simple Answer

Simple Answer by marvelous_blue, on Flickr

Bernie Madoff has the distinction of being the mastermind of the single biggest Ponzi scheme in the history of the world (to date). This bit of infamy has been the individual distillation of the culture of corporate greed and excess that is the modern U.S. economy. A man who was one of the so-called “Masters of the Universe” seemingly managed to fool the whole financial world for more than 16 years, until the financial crisis caused by some of his brethrens greed exposed the scheme and brought him to his knees.

The real tragedy was the loss of some 65 billion in paper wealth that accompanied the exposure of this massive fraud. While there were lots of wealthy people hurt by it there were also philanthropic organizations were hammered by the loss of millions and millions of dollars in what they thought were safe investments.

One of the things that has always bothered me about this was the fact that other banks and financial high fliers seemed to have no knowledge of the scheme. Madoff has always claimed that he was the only one involved, but that seemed to be more about protecting his family from the repercussions of the collapse of this scheme.

Now, however, the New York Times is reporting that Bernie is saying that even he can’t understand how banks and investors could not have not known that he was committing a massive fraud. It is pretty understandable, after all good market or bad he was consistently making the same double digit return year in and year out.

From the article:

“They had to know,” Mr. Madoff said. “But the attitude was sort of, ‘If you’re doing something wrong, we don’t want to know.’ ”
While he acknowledged his guilt in the interview and said nothing could excuse his crimes, he focused his comments laserlike on the big investors and giant institutions he dealt with, not on the financial pain he caused thousands of his more modest investors. In an e-mail written on Jan. 13, he observed that many long-term clients made more in legitimate profits from him in the years before the fraud than they could have elsewhere. “I would have loved for them to not lose anything, but that was a risk they were well aware of by investing in the market,” he wrote.

Now there is are a lot of obvious reasons why Madoff would try to spread the blame around. First and foremost is the attitude of entitlement that these “Master of the Universe” bastards all have. He doesn’t care about the people he has hurt or destroyed by his fraud, in fact while he has helped, somewhat the trustees empowered to try to recoup the money lost in the fraud he has steadfastly refused to help in any criminal prosecutions.
The second reason (to me) is that he wants to show that he is still a player even with a life sentence. He wants the “Titans of Wall St.” to still treat him with respect by showing that he beat them at their own game.

Hopefully the others who are under indictment from Madoff’s firm will roll on the parties in the world of finance who, if there are any, cooperated or discovered the Ponzi scheme and looked the other way. For now all we get are hints from a master fraudster that this story is not over by a long shot.

What’s on your minds tonight Firedogs? The floor is yours.

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Bill Egnor

Bill Egnor

I am a life long Democrat from a political family. Work wise I am a Six Sigma Black Belt (process improvement project manager) and Freelance reporter for