Friday, July 31, 2009

Bandit Bankers and Mrs. Madoff's Money

You may have already heard about the lawsuit against Bernie Madoff's wife by a trustee which attempts to recover nearly $50 million of the funds Madoff swindled from investors in what many call the greatest Ponzi scheme in U.S. history.

According to her attorney, Mrs. Madoff has already given up virtually all of the assets Irving H. Picard, the plaintiff in the suit, has named. According to the New York Times , these assets include a penthouse on the Upper East Side, a house in Montauk, and some property in the South of France.

While counsel for the Madoffs, and family friends, might argue that this is Mrs. Madoff's money, reportedly "tens of millions of dollars" were being funneled from her husband's investment firm making it ultimately his money.

We are not without outrage when contemplating how Mr. Madoff stole millions of dollars from clients, money which in many cases was slated for their retirement, and used it to build a Palm Beach estate, or to buy mink coats and Steinway Grands for his wives, but where is our outrage when, as a report just released by N.Y. State attorney general, Andrew Cuomo, confirms that as many as 5,000 top Wall Street bankers and traders have been awarded as much as $1 million bonus each even as their employers had their hands out for taxpayer bailout bucks?

As the Times also reports, some of Wall Street's largest, and most troubled, banks like Goldman Sachs, Morgan Stanley, Citibank, and Bank of America made sure, whether they showed profit or not, to pass along huge bonuses and pay packages to their executives. The bonuses, by and large, were not performance based, nor did they correlate with company profit.

In 2008, at one major bank alone, banker compensation was nearly ten times that of company profits.

Given what we now know, thanks to the efforts of Andrew Cuomo, one might well ask: are all scams created equally, or are some scams more equal than others?

Again, at a time when heads of Wall Street's largest banks sat before Congressional committees, and Treasury Secretary Tim Geithner, crying about their company's fortunes, they were setting it up so that their highest achievers and, in some cases, bandit bankers could be buying yachts, Mercedes, and Russian sable coats for their wives. Oh, vanity of vanities. All is vanity, and vexation of Mastercard?

Nobody can say we don't have equal oppportunity in this country: equal opportunity to swindle, but the question is, what role did government play in what can only be called the greatest Wall Street Ponzi scheme in history?