Retrospective Bernie: Just Watching

The mirror described the Madoff investigation (actually, more accurately plural “investigations”): “objects may be closer than they appear.” So does the necessity of a stinging review by an inspector general of SEC oversight, and the Madoff train wreck, with its $65 billion in a Ponzi Leggoland, ask a fascinating story. Who watches the watchers?

 

When the SEC is charged with mis-watching, the federal government provides an opportunity of one the special inspector generals (IG) to give room for some self-appraisal. The findings of the SEC IG were terse: investigations were neither “competent” nor “thorough.”

 

The “flubbed” investigations began with an initial complaint in 1992. Investigators and reporters were amazed, and frustrated, by the seeming inability to raise superior eyebrows…or regulator interests. The insights into what went “wrong” are bound to exaggerate the roles of actors. After all, the whistle blower (Harry Markopolos) who smelled a rat, and named it Bernie, worked for a Madoff competitor for almost ten years---insisting Madoff was just too good to be any thing but a Ponzi planner. On the other hand, when the SEC did act on Harry’s allegations, in January of 2006…they insisted that Bernie “misled” them.

 

Imagine the FBI reporting that darn ol’ Al (as in Capone) could not be touched…because he kept “misleading” their investigation.

 

The next investigation will have both politics and crime in its crosshairs: Congress is apparently set to initiate a wide-ranging probe into not Madoff…but the SEC (and even capitalism) itself. According to House representative Congressman. Edolphus Towns is will likely chair special panel investigation of the House Oversight and Government Reform Committee, said on Thursday he will soon convene hearings. "These repeated failures raise serious questions about SEC's internal culture and monitoring, the possibility of regulatory capture and the wisdom of the self-correcting market paradigm," Towns has told Reuters. Of course, there has always been some underpinning of dislike (from certain quarters) towards capitalism, whereby some contrasting beliefs say capitalism is the major source in creating crime.

Finally, then, an answer to the question, of who is watching the watchers. Unless, of course, you suspect any need to watch the ones who write the laws.