Sunday, March 15, 2009

Madoff, robber of the rich but no Robin Hood

Bernie Madoff is stranger than fiction

The saga of the Wall Street swindler is a bizarre story of justice delivered, and justice still denied
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Ian Williams
guardian.co.uk, Thursday 12 March 2009


As mega-swindler Bernie Madoff prepares to plead guilty to fraud charges that will likely land him life in prison, I am reminded of my longstanding writer's dictum: "All the best stories are true." Even down to his name and its appropriate pronunciation – made off (as in, with people's money) – Bernie's tale smacks of nominal determinism.

It would be difficult to invent a character like Madoff, who so triumphantly rolled together Catch 22's Milo Mindbender and Ben Jonson's Alchemist with a sort of portmanteau Nigerian email scam artist. The essential ingredients of their successes are other people's gullibility, and their own greed.

Those two can be a powerful combination. It is very likely that absent the global credit crunch, Madoff would have been able to maintain his scam for many years more, since he had previously managed to keep his investors very happy. It was not his conscience that pricked him into 'fessing up – but rather urgent calls, motivated by the credit crisis, asking for $7bn redemptions that he could not meet.

There is also a deep mystery about just how much was lost. The oft-quoted $50bn apparently is the sum of how much people thought they had. It would be the equivalent of the Alchemist's victims claiming not just the gold they had put in, but all the gold he had persuaded them he could transmute from base metal.

Another thing the Madoff case reminds us of is the fact that wealth, even purloined, has its privileges. Madoff has been out on bail – but had he been a poor African-American burglar he would be cooling his heels in Riker's Island. And unlike most common thieves, Madoff has reportedly been wearing an armoured vest for his court hearings – which, unless he has been banking for the Russian or Italian-American mafia, seems unnecessary.

It is precisely because wealth offers (sometimes unfair) privileges that public vituperation for Madoff has been somewhat limited. After all, any widows and orphans he robbed were very rich ones, hoping to get richer: Madoff's entry threshold for investments was a million dollars, and investors begged him to take their money.

Rich people being robbed is not exactly the stuff of tragedy, and recent events have put the theft into perspective. Sure, Madoff's total lifetime take is certainly more than the bonuses Wall Street Bankers awarded themselves (which the taxpayers now have to pay for). Yet those same greedy, incompetent bankers collected those bonuses based on their mastery of the financial universe – so if Madoff pocketed some of their cash, it may only mean that there is in fact some justice in the world. Just look at the so-called hedge fund managers who collected commissions and management fees to feed the Alchemist's furnace with their clients' money.

The unfortunate thing is that even those feeder funds had significant minimum investments – and across the world of Anglo-American neoliberal economics, the bankers' antics have destroyed the savings and pension funds of millions of hard-working people. The bankers who swindled them should be facing 150-year sentences along with Madoff, instead of gliding on taxpayer-financed golden parachutes.

Madoff's acceptance of that 150-year deal – instead of entering into the plea-bargaining that his wealth and prominence would have "entitled" him to – raises serious questions, especially given his lack of visible remorse and reports of his repeated attempts to safely stash his loot. Unless he has a bolt hole to an alternative dimension, or is about to conveniently fall into the murky waters of New York's East River only to surface elsewhere in disguise, what motives can one ascribe to such a larger-than-fiction character?

I would wager that a recent medical report has led the 70-year-old Madoff to expect that he will serve even less of the 150 years than a broader actuarial assessment would indicate. If I were writing the plot line, he would come back from surgery, call in his sons, explain that the game was up in every sense and advise them to denounce him to the authorities, confident that his family would be well looked-after.

Of course, if I am wrong, and Madoff serves significant time, I hope he has a lot of engaging company. Starting with all the Wall Street bankers.

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