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Way Off Wall Street: The public responds to the Madoff scandal

Posted Jan 6th 2009 7:00PM by Gary E. Sattler
Filed under: Scandals, Columns, Mutual funds

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G.E.SattlerWelcome to Way Off Wall Street, a column dedicated to providing Main Street opinions on topics of interest to investors. Each installment highlights the views of Americans who are far removed from the canyons of Wall Street -- and who often see things more clearly as a result.

After reading nearly 400 publicly posted reader comments regarding the Bernard Madoff Ponzi scandal, I believe that I may have a good feel for the grass roots mood on the subject. In a nutshell, the average American internet crawler is thoroughly disgusted with our financial system and its regulatory agencies. They are fed up, strung out and unequivocally irate. As for Bernard Madoff himself, the overwhelming assertion is that he should be strung up immediately. That sentiment is not meant in a figurative sense either. People want Bernard Madoff publicly hanged, and they want it done with much fanfare in a place such as New York City's Central Park. Yes, this sounds rather coarse. Perhaps it's even uncivilized, but as the internet is my witness, this is what people are saying.

Very few of the comments I have read indicate a feeling that Madoff's investors simply got what they deserved. I did, however, read many statements regarding the fact that high level greed obviously forced many large eggs into one very questionable basket. I myself have not much pity for those investors who lost "everything" to Madoff's twisted dealings. It is my opinion that if investors don't have the sense to diversify, and thereby somewhat protect themselves, they are not very deserving of much wealth. Even my own paltry savings reside in no less than five separate accounts, however paltry.


The one factor in this Ponzi scandal that currently has most internet readers angered, is the fact that Bernie Madoff has been sent home to lick his wounds, rather than being stuffed into a proper jail cell. Some people say that given his financial means, Madoff presents the greatest of flight risks. Most people simply believe that he deserves to be housed in as dark and dank a spot as we can provide for him. The masses are grumbling that Madoff has too many connections to powerful people, and that is why he is being treated so well. Personally, I think he should be handled at least as firmly as Martha Stewart was. Then, we should add a punishment multiplication factor in keeping with the scope and volume of his misdeeds.

The overwhelming concern being voiced by readers of Madoff-inspired articles is the possibility that this Madoff scandal is simply the tip of a much larger iceberg. Reader assertions include multiple allegations of deep corruption within the SEC, continued fraud within the mortgage banking industry, and phantom investment fund balances. The first factor that sends up a big red flag in support of these allegations is the fact that asset declarations made available by Madoff are now being kept tightly confidential. Many comments assert that this level of confidentiality is being maintained to protect Madoff's accomplices. Many comments state that the confidentiality is meant to deny revelation of where the money actually went. What ever the truth may be, it seems crazy to me that Madoff is being allowed to generate his own asset declarations. The man has made it clear that he has absolutely no regard for the veracity of financial documentation.

Perhaps the most disconcerting facet of this entire exercise is the fact that while most people want Bernard Madoff severely punished and stripped of all his assets, most people also believe that he will avoid any prison time for what he has done. The prevailing assumption is that very little of the embezzled money remains liquid, and therefore it will be difficult and expensive to return it to investors. Alternatively, many readers believe that Bernie Madoff has successfully squirreled the money away somewhere unreachable. In either case, I believe that these losses are far more widespread than we know right now. We need to remember that government entities of all sizes invest in these kinds of funds. I think the $50 billion figure might just be a smoke screen for something much larger. Let's hope that I'm wrong.

Tags: assets, Bernard Madoff, BernardMadoff, crime, madoff, mutual fund, MutualFund, Ponzi, punishment, SEC

Reader Comments (Page 1 of 1)

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Last updated: July 06, 2009: 01:35 PM

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