The Fall Of Bernie Madoff Has Political Implications

If the roller coaster ride on Wall St. was not enough to give investors nightmares, the news of the Ponzi style scam of Bernard Madoff is sure to cause many a sleepless night. Madoff made a name for himself as an investment advisor to the ultra-rich, who promised and fulfilled double-digit returns in either a bear or a bull market. His con lasted for more than 4 decades before his historic $50 billion swindle came to an end.

The scam is a relatively simple idea of taking money from investors and instead of legally investing the funds; he would pay returns to other investors, after keeping a portion for himself. The Ponzi scheme is named for Charles Ponzi, an Italian immigrant, who took millions of dollars from thousands of investors in 1920. His lie was based on buying and selling of international postal reply coupons. Basically, he promised to buy these coupons in foreign countries and redeem them here in the U.S. for a huge profit. In a matter of months he went from being broke to a millionaire before he was shutdown for mail fraud.

Madoff’s customers included some of most influential people in the country, as well as billion dollar hedge funds, and Sterling Securities, the owner of New York Mets. The fallout from this scandal will be long and painful for many financial institutions, charitable organizations, and corporations, but the question remains of how could Madoff had such a long run without ever bringing the scrutiny he deserved. Records have shown that several times over the past 40 plus years, questions arose as to how Madoff could consistently produce double-digit returns for his clients, even in down markets. The SEC chief has admitted that his agency did not properly perform their duties for at least the past decade.

Congressional leaders have called for hearings and an investigation into how and why the SEC missed all of the signs of misconduct of Madoff. Interestingly enough, the congressmen who will be investigating the SEC and Madoff are some of the same politicians who benefited from Madoff’s political contributions. Open Secrets, the non-partisan group that tracks political contributions, has listed the political contributions and lobbying efforts of Madoff and his wife for the past 15 years. Madoff has given nearly $1 million to campaigns, committees, and lobbying efforts since 1992. Now we can expect the politicians on high to pass their hypocritical judgment down, so that we may sleep well knowing they are watching over us. I realize that the shock of a $50 billion scam has dominated the headlines, but why have we not heard from any of these politicians about receiving the ill-gotten gains from Madoff? I believe that the political implications of this scandal will get swept under the rug to prevent any embarrassment on Capitol Hill.