SEC Stonewalls at Senate Hearings on Madoff (and Congressional Fireworks!)

L’affaire Madoff gets more interesting by the day. I had though the failure to pursue the hedge fund scamster had more to do with incompetence and a disinclination to go after investment managers (insider trading cases, which is what seems to get the SEC’s enforcement division juices going, usually pick up penny ante players at big name firms, so they generate lots of media coverage without rocking any boats).

But the Congressional hearings today suggest that the SEC, or at least some of its members, think they have something to hide.

We are well over a year into the financial meltdown, and the regulatory officialdom was (at best) asleep at the wheel. Yet we’ve had almost no real inquiry as to who in power knew what when. Madoff was a particularly egregious case, due to the longevity of the fraud, the scale of the losses, the clear and multiple warnings, and SEC’s reluctance to do even basic follow up on detailed leads involving prominent and well connected members of the financial community (look what happened with the insider trading allegations against hedge fund Pequot Capital: like Madoff, precisely nothing).

From OpenLeft, “Bush SEC Holdovers Cite Exec Privilege In Stonewalling Congress About Madoff Scandal” (hat tip reader Tom). . BTW, Ive seen a lot of tongue lashings by Congressmen, but this is one of the most pointed I recall in quite a while:

This second clip is the one referenced in the piece below:

At a contentious Financial Services Committee hearing today about the failure of the Securities and Exchange Commission to prevent the Bernie Madoff scandal, the SEC’s General Counsel cited executive privilege as reason that he and the SEC’s enforcement branch were refusing to answer congressional inquiries. You can watch the video here – the executive privilege issue comes at about 5 minutes and 15 seconds into the clip. [in the one I found, see 3:23, but the whole thing is worth viewing]

As you’ll see, SEC officials refuse to answer the committee’s basic questions about the Madoff scandal, and the agency’s acting general counsel, Andy Vollmer (a Bush holdover and maxed-out donor to John McCain’s presidential campaign) explicitly cites executive privilege as his legal rationale for refusing to provide basic information to federal lawmakers.

Congress has a constitutional obligation to engage in basic fact finding, both in order to legislate reforms at the SEC and to publicly expose how our economy was destroyed by sharks like Madoff. Now, Bush holdovers at the SEC are using executive powers – powers that are now President Obama’s – to prevent Democratic lawmakers from doing their job.

And this from Investment Daily (its headline “SEC officials dodge questions; one claims privilege,” and posture is a departure from its usual tone) points out CLEARLY that the invocation of executive privilege has not been authorized by the Executive Branch (ie, the current Attorney General’s Office):

Members of the House Financial Services subcommittee on capital markets, insurance and government-sponsored enterprises hammered SEC officials today at a hearing looking into the alleged Bernard Madoff Ponzi scheme.

Agency officials declined to comment specifically about how they missed the fraud after being tipped off over a number of years by Harry Markopolos, a fraud investigator who formerly worked for a hedge fund that competed with the Madoff fund.

They said an ongoing investigation by the Securities and Exchange Commission inspector general kept them from commenting.

At one point during the hearing, SEC acting general counsel Andrew Vollmer claimed executive privilege in declining to answer some questions.

Subcommittee chairman Paul Kanjorski, D-Pa., asked Mr. Vollmer if he had obtained executive privilege from the U.S. attorney general.

“No … this is the position of the agency,” Mr. Vollmer said.

Did the SEC instruct him not to respond to questions? Mr. Kanjorski asked.

The commission supports this position, Mr. Vollmer said, but “the answer is no.”

Mr. Kanjorski asked if Mr. Vollmer was asserting executive privilege on his own.

“No, I wouldn’t say that,” Mr. Vollmer said.

SEC spokesman John Heine did not have an immediate response.

Mr. Markopolos, appearing for the first time before a congressional committee, skewered the SEC. He detailed his frustrations in attempting to get the SEC to look into the Madoff operation.

The “financial illiteracy among the SEC’s securities lawyers was pretty much universal with few exceptions,” he said in prepared testimony.

Congress might finally be growing a set. Better late than never.

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  1. Lune

    The Madoff affair, while a stunning example of regulatory failure, is unlikely to involve government bailout. The losses will mostly be borne by the private investors in his funds.

    When Congress starts investigating the abuse of public funds (e.g. TARP; Citi, Merrill, AIG bailouts, etc.) as vigorously as it is appearing to investigate the abuse of private monies, only then can one say Congress has finally “grown a set”.

  2. bg

    “Now, Bush holdovers at the SEC are using executive powers – powers that are now President Obama’s – to prevent Democratic lawmakers from doing their job.”

    Since Bush is now a citizen, Obama has complete rein over use of his executive privilege, as Nixon had. He can compell testimony, explain why testimony will be bad for the country, or be silent in defense of Wall street insiders. Like you, Yves, I see both administrations as being captive to the financial status quo. It takes a lot of cynicism on my part to put together a reasonable explanation as to why they are captive.

  3. Anonymous

    It doesn’t take much imagination to envision a “heck of a job, Brownie” award for the SEC crowd. Clearly a table full of mush mouthed incompetent, responsibility avoiding slimeballs. How hard is it to just say, “Look, we screwed up royally and we know it.” I’m surprised they aren’t crucifying the Cheung woman now that she is conveniently gone.

    The more ominous interpretation is that the SEC was clearly told to stay clear of Madoff by higher ups. Who might that be? Hmmmm. How about a real dick? Well, that doesn’t limit it much. Lots of those.

    The SEC is claiming that they can’t just barge in and commandeer the books just because they are suspicious. If that is true then exactly what good are they as watchdogs? Must the guilty confess first? It is clear that they didn’t have any concept of what might constitute realistic year over year returns.

    In fairness it must be acknowledged that the SEC is primarily involved in prosecuting cases of insider trading rather than elaborate ponzi schemes. Investigation and prosecution of insider trading is completely different from financial fraud such as perpetrated by Madoff.

    Had there been no whistle blower I might forgive or at least tolerate the failure. But having the carcass dug up and delivered at no charge only to stink up their front steps for eight years makes it pretty clear that Madoff was being protected at a very high level.

    The damage to US financial transparency and credibility because of this is almost impossible to overestimate. We are now a laughingstock and it is hard to see the rest of the world keeping faith in our institutions and laws.

    I have long believed that the primary remaining support for the dollar has been because of this underlying faith that our financial markets are transparent and reasonably honest. Gone.

    The dollar shall suffer.

  4. ndk

    Congress might finally be growing a set. Better late than never.

    You remind me of a favorite quote, Yves: Pity the meek, for they shall inherit the Earth.

    It was cute when Mr. Vollmer repeatedly stated that this is “a process Congress set up.” Deflecting blame back at Congress during a hearing in which you’re being called out on the floor for dereliction of duty is definitely an interesting tactic.

    Anyway, calling the SEC the enemy helps, but recriminations get us no closer to a better world when the accuser is also roundly hated. Congress and the rest of the Federal Government has shockingly low approval ratings and public stock. Trust will not come from them.

    Indeed, after watching Congress in action, I have absolutely zero faith in my elected officials nor even their good intentions. Are we to forget Dodd and Friends of Angelo, the Keating Five, Frank’s special TARP channeling, the preposterous “stimulus” bill, and others?

    Obama has been an anchor of faith for many people to latch onto in hopes of meaningful change. That’s dangerous. If he fails to deliver for whatever reason — and he shows every sign of such failure thus far, which worries me — I fear the consequences for our country.

  5. Yves Smith




    At this juncture, the SEC did not call home to the mother ship. They are invoking executive privilege with no clear basis for doing so. If you watch the second video, look how long it took to get Vollmer to ‘fess up that that was what he was relying upon, yet the idea was cooked up only within the SEC, no authorization from the Justice Dept.

    This was to keep the dogs at bay for this round. I’m assuming Team Obama won’t let them try this little ruse a second time. If they do, things are worse than I imagined.

  6. Yves Smith


    We barely went to church when I was a kid, and the only sermon I remember was when the pastor discussed mistranslations in the Bible. The only one I remember is “the meek shall inherit the earth” Apparently, in the original (Aramaic?) it is much closer to “the powerful shall inherit the earth”.

    But I have never independently verified that.

  7. Anonymous

    Bush ain’t here anymore.

    From an AP article today “Lawmakers clash with SEC over Madoff probe”
    the following….

    “While the SEC is incompetent, the securities industry’s self-policing organization, the Financial Industry Regulatory Authority, is “very corrupt,” Markopolos charged. That organization was headed until December by Mary Schapiro, President Barack Obama’s new SEC chief.”

  8. Matt

    Yves, thanks for this — your blog is one of the best. I read Markopolous’ testimony tonight and, if he’s truthful, he handed them Madoff on a platter. I think if the authorities (including both Congress and the executive branch agencies failing to do their jobs) spent a few hours each day reading up dissenting opinion, we might have a different set of results. Since these “authorities” are thoroughly convinced of their own expertise, I’m not hopeful.

  9. Anonymous

    From an AP article today “Lawmakers clash with SEC over Madoff probe”
    the following….

    “While the SEC is incompetent, the securities industry’s self-policing organization, the Financial Industry Regulatory Authority, is “very corrupt,” Markopolos charged. That organization was headed until December by Mary Schapiro, President Barack Obama’s new SEC chief.”

    FINRA is completely corrupt, and Obama has FINRA alum Schapiro heading the SEC and FINRA alum Shulman heading the IRS. Shulman is a Bush holdover, but he’s only about a year into a 5-year term.

  10. Independent Accountant

    My experience with SEC personnel is that they are cowardly and financially illiterate. They like to fill out forms. As the Madoff scandal unravels something began bothering me a few days ago, i.e., Madoff is a peanut in the scheme of things. His ponzi scheme is the biggest I’ve ever seen excepting Social Security, by two orders of magnitude! What’s going on here? Is Madoff really a “fall guy” for persons higher up on the food chain? Did they tell the SEC “hands off”? We’ll see. Maybe.

  11. ndk

    FINRA is completely corrupt, and Obama has FINRA alum Schapiro heading the SEC and FINRA alum Shulman heading the IRS. Shulman is a Bush holdover, but he’s only about a year into a 5-year term.

    That’s an excellent point, 9:03. Between her, Geithner, and Daschle, not to mention prior incidents, we may soon find Stephen Colbert(my choice for President, guaranteeing I’d be a part of the problem no matter who won) coining a new word: “changiness.”

  12. Tahoe

    excellent post. As always, kudos. My jaw dropped as I watched this today. I hope the second round will be more fruitful. Not a pretty picture for those of us trying to see where trust and confidence can be rebuilt. I love the “what went wrong” question from Rep. Ackerman, and his offer to have the panel explain themselves, tells them its a question, and then tells them who shall we start with, hear no evil, see no evil, speak no evil. And what does the panel do, they all look blankly at each other until Enforcement Director speaks up. Good gawd. What a gong show.

  13. Anonymous

    So, when do we get to the accusations of malfeasance of dereliction of duty?

    Couldn’t Markopolos have gone further?

  14. Anonymous

    Change is here. It sounds a lot like the last bunch of BS.

    Madoff is a terrible example or the nonsense. This was a supposed “prive equity” firm. There should be no protection.

    If it was not off the books of the sec, how did they not realize there was nothing there? Nothing. I heard the figure that 925 million had been located. One fiftieth of the supposed loss.

    Just another example of socializing the losses and privatizing the gains. How does the tax payer get stuck watching these people?

    The line that Madoff seems to stand on both sides of is the problem. It goes right up through the highest parts of both the new and the old administrations.

  15. Anonymous

    Well Mr. Ackerman, who exactly was it that created the SEC?

    Mr. Ackerman: I brought you into this world, I’ll take you out.

  16. jmd

    Mary Schapiro = Agent of the Same
    Best buddies with all the GCs at the former, major i-banks, Lehman, Goldman, Morgan Stanley. Sad stuff.

  17. Anonymous

    “Mary Schapiro = Agent of the Same
    Best buddies with all the GCs at the former, major i-banks, Lehman, Goldman, Morgan Stanley. Sad stuff.”

    Wall Street has the FINRA bobsy-twins Schapiro at the SEC and Shulman at the IRS to wink at their tax shelter promotion and their boiler-room promotion.

  18. Anonymous

    There should be no bailout for Madoff investors beyond what they got from SIPC (and without a bailout for SIPC either.)

    They invested in a hedge fund. The risk is their own.

    Later we can fix the SEC. For now it’s important to make sure no government bailout money goes to Madoff investors.

  19. Anonymous

    NYT seems to have done a pretty thorough live-blogging of Markopolous’s session with the House committee today. I’d like to listen to it or watch it, but can’t seem to find a link for audio or video.

    IA: “Is Madoff really a “fall guy”?

    I think the (speculated) organized crime links might be significant. Seems possible that a money laundering operation could have continued to produce (or appear to produce) consistent returns, but he lost his nerve or his will to go on, and the meltdown gave him an excuse to bail.

    Was he being protected in exchange for providing information on his clients? Lots of intelligence services around the world might be interested in (and involved in) the black economy.

  20. DoctoRx

    Scary re info cited above re Schapiro. Sadly, it fits the developing meme of Obama as agent of continuity.

    In order for Madoff to have done what he did for as long as he did it and to the dollar extent that he reached, is it plausible that it reached no higher than him?

    The mother of one of my childhood best friends lost her life savings (not a rich person) w Madoff. My parents alone know at least 3 others who lost significant sums.

    I wonder how many potential investors will just stay away from the stock market for the long term now who might have come back when the economy turns. Perhaps more permanent demand destruction for stocks has occurred from Madoff and the other Ponzi-ites being uncovered than from all the busted CDOs in the world.

  21. artichoke

    Did anyone else listen to the FINRA phone call for banks just before the first House vote on TARP? I remember you did, Yves. :)

    That phone call was consistent with the notion that FINRA is 100% corrupt. They work for the bankers and want to serve them.

  22. artichoke

    Vollmer asserted “Executive Privilege” without any authority from the Executive!? He must be mistaken as to the identity of the Executive.

    Sounds like an attempted coup to me. Shouldn’t they lock him up and try him for treason? Seriously, Congress cannot let him get away with this, or they cede their Constitutional power.

  23. Anonymous

    It sounds like a whole underground mafia of folks working dilligently to bring down the government to me.

    Where are the calls of treason and the lawsuits?

    We are white noise.

  24. David

    10:01 – it would have been an interesting business model if he had been delivering the returns via something like a 20% laundering fee. Maybe between the oil price cutting off rogue producers and the general crash killing the coke market, Madoff’s capital evaporated.

    Maybe that’s why Markopolos is afraid: some of the mobsters are going to be unmasked, and they’ll get him for it.

  25. doc holiday

    Congress seems pretty retarded in response to ” executive privilege”, i.e, either Obama is backing them and going to protect them in a deal that is in the works — or these fools are full of shit, and they should be called out for Contempt of Congress, false and misleading bullshit, aiding and abetting, falsifying information, obstruction of justice, treason and various stuff like that.

    I always felt DOJ and FBI were compromised during The Bush Coup and obviously SEC and DOL were tools to help insiders break the law. I further think IRS and all of Treasury were compromised and The Federal Reserve Board and The FOMC and FASB are all nothing but peas in a shell game — which is why this type of corruption was allowed to go on, for so long!

    And finally, after watching Congressman Sherman, it is obvious that people in the SEC, Congress and all the people involved in banking regulation are idiots that are at least ten years behind reality and they are clueless as to what derivatives are and why we in the mess we are in.

    The blind are leading the blind and Obama is surrounded by retards!

  26. Anonymous

    The 3rd Beatitude – Blessed are the meek; for they shall inherit the earth.

    In the Greek New Testament, “meek” is from the Greek term praus. It does not suggest weakness; rather, it denotes strength brought under control. The ancient Greeks employed the term to describe a wild horse tamed to the bridle. The Hebrew term used meant ‘humble’. The essence of being that in service to God you are both strong and humble. Something nuns and priests use as a vow to their life-long commitment in service.

    Psalm 32.9: Do not be like the horse or the mule, which have no understanding but must be controlled by bit and bridle or they will not come to you.

    Again ‘inherit the earth’ is open to interpretation. When it was first written, it is likely to have referred to the land of Canaan; a sort of declaration that the strong and obedient (to God) will have lands to call their own. But in biblical terms, God created the earth, therefore such inheritance was always implied as ‘spiritual’ rather than as a physical asset and by such strong humility, you will be welcomed in Gods kingdom on Earth as it is in Heaven.


    Maybe the best explanation I have heard was that the meek shall inherent the earth. . . . after we are done with it. Maybe The Anointed One was a former Goldman Sachs director?

    Just to make this thread CRish. . . .


  27. Anonymous

    …..but crucifying Martha Stewart was no problem.

    Was expecting the infamous Gore statement, “There is no controlling legal authority” to regulate over the counter contracts, can we leave now?

  28. Anonymous

    “For now it’s important to make sure no government bailout money goes to Madoff investors.”

    The first thing I thought when I read the Financial Times story where it was mentioned that Treasury was giving hedge funds access to the alphabet soup was that it was a bailout for Madoff investors.

    I realize that sounds absurd, but given the outright theft and fraud we’ve seen so far, I could well be right. A few weeks before that FT story, I predicted to my seasoned investor father: “Just watch, we’ll bail out hedge funds next.” He insisted that’d never happen. I should have made a wager.

    “It sounds like a whole underground mafia of folks working dilligently to bring down the government to me.

    Where are the calls of treason and the lawsuits?”

    Read the above after reading at least one of the long Markopolous documents. The site is Gonzo but great.

  29. Anonymous

    “The blind are leading the blind and Obama is surrounded by retards!”

    Incompetence is the defense used not only by the stupid, but even more often by the deeply complicit and corrupt.

    I keep thinking of the FBI’s “incompetence” when it came to the repeated warnings of the Able Danger staff about the 911 hijackers before the event. The warnings were squelched and ignored in fashion exactly like the SEC’s “incompetence” in the Madoff case.

    Don’t let 911’s status as a graven national myth keep you from seeing the pattern.

  30. Anonymous

    I think this is the tip of the iceberg…

    …my question: I assume Holder (the new Attorney General) can comple them to testify? It would be odd if the AG had to prosecute an executive branch agency that refused to back down from claims…of executive privelage.

    That’s a new one. I’ve never heard of that!

  31. Anonymous

    Wait a minute, wait a minute…is that even legal? Can counsel for an executive branch agency sit before Congress and under oath(?) claim executive privelage that has never been issued by the executive branch?

    Isn’t that some form of misrepresentation?

    Has a violation of law already occurred?

  32. Stuart

    This is the tip of the iceberg for how corrupted with conflicts of interests and incompetence those to whom we have entrusted our financial system are. OMG. What can one say that can press this point home any harder than simply watching the SEC officials at today’s hearing. Watching it today, we’re talking a complete system re-boot. It became very clear that the SEC 1st priority is to maintain the system from collapse irrespective of whom and what they need to protect and cover up. Their constituency is the system itself, irrespective of how corrupt it becomes.

  33. anon 10:01

    Anon 10:35, thanks but no luck here from that link. All I really want is an mp3 of Markopolous.

    David 10:35, “Maybe that’s why Markopolos….” I suspect that he knows a lot more now than he did when he started looking into this. He has taken steps to assure some people that he really didn’t act against their interests.

    From the NYT live blog: “If anyone in the Russian mob were listening to the hearing, Mr. Markopolos said he was trying to protect them from harm as well.”

    Open testimony before Congress is one channel; I hope for his sake he has others. Given his background they would have reason to be suspicious.

    Seems I heard that the reason for the $700 billion number in Paulson’s original three-page proposal, which had been under consideration at Treasury as a possible contingency for months before last September, was that it was a big number but not too big. Seems that’s where we’re at with the stimulus trainwreck.

    One for-real stimulus, that the incoming team should have been working on for months now, would be to nuke the current system of finance “regulation”. It’s not as if they weren’t provided a clue, but they sure seem to be acting that way.

  34. Anonymous

    Where is Congress doing anything? A bit of grand standing on TV? yawn. How about some contempt indictments? that might be starting to do something.

    As for this non-sense about Bush hold overs blocking democrats – what a laugh and what a typical bit of rubbish from the party loyalists which can’t find a spine to criticize their own. This is the Democratic Party’s govt. its their bailouts, their executive branch, their congressional committee hearings. This party is going to go down in flames for even being worse than Republicans, because in the face of total public fraud with the ability to do something about it they are taking a powder.

  35. Expat

    “Woof! Woof!”

    “What’s that, Lassie? Madoff has pushed his fund into a well and can’t get out?”


    “Madoff is not in the well himself?”


    “Ok, Lassie, so shut up or I will take you to the vet and have you spayed! And by the way, what is a fund anyway!?!”

  36. fresno dan

    being a bureacrat, I like the precedent of bureacrats citing “executive privilege” from US presidents who are no longer US presidents.
    Nest step – US presidents who are no longer alive (Taft said executive privilege!)
    Final step – any president of anything (the president of the order of nudist tiddly winkers cites executive privilege!!!)

    I was at a mediation for a federal employee who was prevented from working for several years. The lawyer who repesented him asked management many, many questions.
    Management’s answers?? “Ida Know”

  37. Anonymous

    Obama could make himself an instant hero by firing and investigating every SEC employee at that table and replacing them with FBI employees. Remember the public reaction when Reagan fired the air traffic controllers when they called a strike?

  38. Independent Accountant

    Anonymous 6:57AM:
    I have bad news for you. The FBI is almost as badly compromised as the SEC.

  39. Anonymous

    Yves- Matthew 5:5 Blessed are the meek,for they shall inherit the earth..The interpretation of “Meek” in Greek language of New Testament is “angry at sin.” Jesus being closer to Aramaic language in His day(And the fact that this was His Word) than we are would have understood the interpretation of the Old testament Quotation of this verse.

  40. Anonymous

    Long ago I listened to McCarthy hearings and learned the power of congressional investigations. Subsequently and rightfully they were toned down. But as part of its general kowtowing to the Executive Congress now has E.D.

    Madame Pelosi refused to use these powers last Congress. I do hope she acceeds now.

  41. Anonymous

    BTW, Ive seen a lot of tongue lashings

    Me too, and every one of them came from the mouth of a hypocrite. Why do people over the age of 30 get off on that bullshit?

  42. freude bud

    I think it is somewhat odd to think that Congress has grown a set of balls by publicly humiliating a set of career government workers, the highest level likely being a G14, who certainly don’t have the luxury of turning up their noses at half-a-million dollar salary caps.

    I mean, Ackerman knows they cannot afford to fight back directly, doesn’t he? Hardly courageous … not even a sign of strength … they just have to take it. You cheer em on?

    And the notion that these guys are stupid because of their failure to regulate well is pretty well belied by the people who happen to be counsel to all the major banks in compliance now … nearly all of whom are former employees of the major regulating commissions. Why do you think that is?

    I’m as pissed off as anyone about this, but being cheered by this display misses what it was truly about.

    If Ackerman takes on Paulson and Cox with the same level of contempt, then I would be impressed.

  43. doc holiday

    Re: Remember the public reaction when Reagan fired the air traffic controllers when they called a strike?

    That is a great tip and if Obama is out there surfing for shit and visiting Yves Place, that is an idea to keep in the back of his mind! Why not simply mandate that instead of giving these crooked bastards a break, we actually put the fear of God into all the people involved in this economic systemic shit-fest and get serious about fixing America with real progressive actions. I just read this morning that the CEO Clown from GE thought pay caps were a bad idea, but I wonder how he would feel about being audited and then investigated for the actions of the company he runs, where he signed off on Patriot Act, Sarbanes Oxley documents which could probably buy him some time in prison, along with many of his friends. Obama needs to take off the kid gloves and get over the fact that he is thought of as a nice guy and a nice speaker and the first black American President — he needs to get down right nasty and place these fuc-ers in the path of righteousness and accountability! Who gives a crap what The CEO from GE, GM, Goodwill or Google thinks at this point? Wall Street is guilty of fraud and they need to all be treated like crooks and they all need to come clean and prove they have value!!

    Why not just fire the vast majority of government financial regulation-type employees that were among the ants working for The Bush Coup — who were doing the dirty work, i.e, they were not doing their jobs? They could all be blackmailed for the good of the state and then, come clean as whistle blowers and testify against their corrupt and evil bosses, who would then be given small bars of soap, and small towels from The White House (after fair trials) before they enter Federal Prison, where they will seek safety in the arms of their new horny masters. These FBI, SEC, DOJ, FASB, DOL and assorted Fannies and Freddies and SIFMA-backed and linked crooks, all part of the Bush Coup Conspiracy, all deserve to be hung for treason, but as a person willing to turn the other cheek, I can rest peacefully in knowing that these pirates will become future bitches of America and at some point, hold their heads high as they bend over, in the name of liberty, justice and the pursuit of happiness!

    Amen and have a soapy day! I feel better all ready!!!!

  44. AP

    Doc, let’s remember Obama wouldn’t be there if we wasn’t already on board for perpetuation of this madness.

  45. Anonymous

    Finally, an article that focuses on what’s really going on instead of just gloating about who’s on the list. This is good journalism.

    I also saw a video about this at where they broached the question of the media’s focus. You guys are keeping it real!

  46. roger

    The independent account echoes a big righwing meme by writing that the “ponzi scheme is the biggest I’ve ever seen excepting Social Security, by two orders of magnitude!”

    Actually, no. It isn’t Social Security that was the congame – it was the privatization scheme, a la bush. Whcih was based on the Chilean model that has so far lost 30 percent, and might well be dead by the end of this year. That was the vaunted put your nest egg in a private account scheme.

    The bigger retirement congame is called the 401 k. It is a tax deducting monstrosity, encouraging very very bad investment decisions by people who are generally ignorant of the market – the kind of rubes the investment salesmen crave. They have cratered. And they obviously were going to. Their tax status should be revised, so that people are not encouraged to give their money to the seedy and disgusting financial services sector. Teresa Ghilarduci, who has upset the dittohead crowd by pointing out how insane it is for the government to continue to promote the 401k ripoff, should certainly be read by more people sso that we can have a discussion about how to do retirement in this country in a sane and safe fashion, instead of using accounts, the 401(k) joke, that is essentially sharkmeat with which the financial markets can play around, building shadow wealth.

  47. Anonymous

    Why didn’t the SEC follow up on tips about Madoff’s operation and uncover his fraud? The fact that somebody was able to run such a large scheme for so long on a continual basis without somebody catching makes you wonderif Madoff was able to grease the squeaky wheels both within his own organization and out?

    If that is the case than the fraud as shocking and pervasive as it is already known to be is more pervasive and shocking than previously thought.

  48. Anonymous

    It is my opinion that if all hedge funds were required to disclosed who was vested with them 90 percent of our congress would be implicated. Please explain to me how the practice of Naked Short Selling could have gone on for 10 to 15 years and SEC, Congress and DOJ wasn’t aware of it? ANSWER: Impossible!

    Then there are the complex derivatives debacle known as Credit Default Swaps; Insurance contracts sold against securitized mortgages that didn’t exist or once again Naked Short Selling.

    “The Counterfeiting of Shares of Fannie Mae and Freddie Mac” …. You can download and read here

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