Madoff story. Bigger than Enron

From the savvy Doug Kass as the Madoff story was initially breaking.

If the Madoff story is correct, it is the single biggest financial story of the year. Indeed, it is bigger than Enron or Tyco, bigger than Boesky and far bigger than Bayou.

It attacks at the core of investor confidence, which has already crumbled and remains very fragile.

Read that again. “Bigger than Enron”

A British fund manager blames the deliberately nonexistent US governmental regulation and oversight.

“It is astonishing that this apparent fraud seems to have been continuing for so long, possibly for decades. The allegations appear to point to a systemic failure of the regulatory and securities markets regime in the US,” [Fund manager Nicola Horlick] told The Sunday Telegraph.

Madoff could not have pulled off this decades-long scam by himself. He must have had help. Who are they?

NY Times

But a question still dominates the investigation: how one person could have pulled off such a far-reaching, long-running fraud, carrying out all the simple practical chores the scheme required, like producing monthly statements, annual tax statements, trade confirmations and bank transfers.

Firms managing money on Mr. Madoff’s scale would typically have hundreds of people involved in these administrative tasks. Prosecutors say he claims to have acted entirely alone.

The Big Picture is as suspicious as I am about Madoff tearfully confessing to his sons it was all a Ponzi scheme and them then Doing The Right Thing by going to the SEC.

Who was Madoff’s accomplices? I have no idea, but there has to be some! If I were the SEC, I would be looking over close friends and family closely. Very, very closely.

Also, why did some hedge funds, who certainly should have known better, give Madoff so much money? Clusterstock looks at Fairfield Greenwich Group, who had $7.5 bn with Madoff. They make a great show of the amount of due diligence they do in checking out investments, yet missed obvious and glaring warning signs that many others, including Doug Kass and Barron’s, saw long ago.

Finally, why is Madoff allowed out on bail while Dreier, whose alleged theft is “only” $380 million not?

There are many questions that remain unanswered today regarding Madoff, but one of the biggest to me is why the authorities allowed him to be released on only a $10 million bond when the possibilities exist that he is either going to kill himself or attempt to flee the country.

Stated simply, I can’t see how anyone could live with themselves after doing such a thing; the burden of guilt would just be too much for any human being with a half-developed conscience to bear.

That assumes he has a conscience.

BTW, ClusterStock gets my vote for best coverage of the continuing Madoff debacle.