Blogs & Comment

Madoff gets 150

It’s been busy times hereabouts, so this will be short but if you’d like to get the inside scoop on what it was like to sit in the courtroom and watch the biggest fraudster in U.S. history be sentenced, check out this excellent colour piece from The Big Money ‘s Chadwick Matlin.
The Big Moneyis Slate magazine’s online business start-up. Though it has its moments of irrational exuberance, it’s a smart and well-written site, and its articles often capture the absurdities of doing business in today’s New York. (Full disclosure: my partner used to work there.)
Some, including the Globe and Mail ‘s Christie Blatchford, question whether Madoff should have gotten a sentence that’s about six times as onerous as that served to the average murderer in Canada. She also questioned whether those being described as victims for buying in to Madoff’s schemes actually were victims, considering their motivations and the extent to which they were benefiting. She makes several good points.
However, this analysis underestimates the extent to which the Wall Street of the past nine months has neededthe story of Bernie Madoff. He’s become a lighting rod for anti-Wall-Street anger and a cathartic symbol for all that went wrong in a world where money magically created new money, and where not enough people asked enough questions about how or why this was happening. They just hoped it would continue, and that they’d get out with enough of a golden parachute to survive, once the mountain of debt on which that period’s prosperity was built came crashing down.
To illustrate the extent to which no-one was asking questions, or even wanting other people to ask questions, of how money was being made in the Leveraged Society, one of the first stories I covered when I moved down to the U.S. in January 2007 touched on a report put out by the redoubtable New York Senator Charles Schumer. It complained that excessively onerous Sarbanes-Oxleyregulations were causing companies and capital to flee New York’s exchanges for the more welcoming climes of London’s AIM. How times change. Today, all Schumer can talk about is the importance of forcing AIG executivesto pay back their bonus money.
Such whiplash-inducing shifts in attitudes to market regulation help show why Madoff got away with what he did and then, once caught, received such a crazy sentence. With Bernie behind bars for 150 years, this thinking goes, the crime has been punished, the perpetrator put away. Now the rest of Wall Street can draw a veil over that particular era and move on.
Too bad economic reality is likely to get in the way of that particular thesis. But still, everyone craves closure. And at least the man got sentenced. In Canada, he’d be busy writing a self-aggrandizing book, or some other such promotional activity, while regulators across provincial boundaries bickered amongst themselves as to how to charge him.
Meanwhile, Ruth Madoffcontinues to entertain (and appall) with talk of crying herself to sleep, thinking of the millions of people her husband bilked. It’s a sentiment that doesn’t exactly go over well with the newly poor that Madoff left behind. As one so-called victim, paraphrasing Dante, put it: “May Satan grow a fourth mouth [of hell] where Bernard L. Madoff deserves to spend the rest of eternity.”
Meanwhile, the Canadian angles to Madoff’s demise continue to unspool. But more on that later.