Banks, advocacy groups, millionaires may benefit from taxpayer handouts
Exclusive to Western Voices
The news has been full of horror stories since the December 11 arrest of accused financial swindler Bernard L. Madoff, with tales of bleak gloom descending on the denizens of the “exclusive” Palm Beach Country Club, panic at nonprofits supporting Jewish ethnic self-awareness, and confusion in corporate boardrooms from Geneva and Lucerne to London, Tokyo, New York, Paris and Tel Aviv. The shock rocked Edinburgh, where executives at the eminent Royal Bank of Scotland, founded in 1727 as a financial check on the machinations of the supporters of Bonnie Prince Charlie, are reeling at the news. Madoff’s Ponzi scheme, operated as Bernard L. Madoff Investment Securities LLC, may have stolen as much as $50 billion from investors worldwide, among them Japan’s Nomura Holdings, BNP Paribas of France, the London-based HSBC Holdings and the Spanish Banco Santander, as well as numerous wealthy people, largely from America’s Jewish community. The alleged ripoff by Madoff may well be the worst and most expensive scam of its kind in financial history, and the extent and full economic effects have yet to be evaluated.
Luckily for some of those well-heeled country clubbers allegedly scammed by Bernie Madoff and his “private investment business,” though not so luckily for America’s long-suffering taxpayers, a partial “bailout” may already be in store to take some of the edge off the losses. CBS has reported that Louis L. Stanton, the federal District Judge overseeing the Madoff case, ordered Madoff’s alleged victims to apply for relief with the Securities Investor Protection Corporation (SIPC), a federal agency established in 1970 and designed to compensate investors when brokerage firms go under. Helpfully, the SIPC stepped in itself and made the application for the order directly to the court. “Upon information provided by the Securities and Exchange Commission and Financial Industry Regulatory Authority, it is clear the customers of the Madoff firm need protections available under federal law… SIPC and the trustee are dedicated to returning assets to customers as promptly as possible,” SIPC President and CEO Stephen Harbeck declared.The alleged victims of Madoff may not be totally happy, though. Historically, one key to successful Ponzi schemes has consistently been the greed of the targets, who are blinded by the high rate of return promised (and, at least for awhile, as new investors come in, consistent), high rates of return. Madoff also, according to numerous reports, cultivated an air of exclusivity, with the daughter of one burned Madoff mark saying on National Public Radio that her father felt as if he had “won the lottery” when Madoff deigned to take his account. So reports that Madoff held most, if not all of the investments of many alleged victims means that their paper wealth Madoff was “investing” would often have exceeded the $500,000 in compensation allowed to investors, “only” $100,000 of which is available in cash claims, by the SIPC.
“There are people who were very, very well off a few days ago who are now virtually destitute,” one Manhattan lawyer told the New York Times shortly after Madoff’s arrest. “They have nothing left but their apartments or homes — which they are going to have to sell to get money to live on.” Given what we are learning about the “exclusive” nature of Madoff’s investment circle, and their posh haunts like the Palm Beach Country Club, “virtually destitute” probably doesn’t mean the kind of hardship former Chrysler workers are living with on their unfunded pensions. With the announcement of a Congressional investigation into the Madoff case, let alone the enormous amount of cash involved, as well as the power and clout of the alleged victims, observers should expect new compensatory measures to be announced, probably, as with the Wall Street bailout, in the name of “helping the economy.”
Interestingly, the SIPC states that “the Federal Trade Commission, Federal Bureau of Investigation, state securities regulators and other experts have estimated that investment fraud in the U.S. ranges from $10-$40 billion a year,” meaning that Madoff’s single alleged swindle run outdid the top estimate of all annual investment fraud in the United States. A case could be made that the “Ponzi scheme” should be renamed the “Madoff scheme.” At the time of his arrest in 1920, the legendary Charles Ponzi, after whom the Ponzi scheme is named, had only scammed the equivalent of $4.59 million in 2008 dollars from his working and lower middle class marks, and his con only lasted for a matter of months. Compared to Madoff, who apparently scored an amazing $50 billion from high flying socialites, famous people and established banks over the course of at least a decade, Ponzi was a rank amateur.
Among those http://www.wvwnews.net/story.php?id=6230. Yeshiva University, the New York Jewish college where Madoff chaired, appropriately, the business school, was reportedly cleaned out to the tune of $110 million in hedge funds.
In fact, the “Jewish” nature of the Madoff meltdown is so blatant that many are doing nothing to obscure the links, or are even highlighting them. http://www.wvwnews.net/story.php?id=6246, the Israeli daily, called the revelations an early “Christmas gift” to those who “hate” Jews: “The anti-Semite’s new Santa is Bernard Madoff. The answer to every Jew-hater’s wish list.” The article was given a title as melodramatic as its contents: “Life Imitates Anti-Semitism.” Haaretz obsessed on the theme that Madoff was more than just a conman: he conned other Jews. “Madoff’s greed was uncontrollable enough that he targeted fellow Jews, even Holocaust survivors, some of them his own friends, as well as Israeli companies who insured Jews, including Holocaust survivors.” Apparently, according to the unavoidable subtext, a Jew scamming other Jews, especially “Holocaust survivors,” is a uniquely evil criminal.
Opinions like this, which have been repeated in story after story, are hardly likely to ameliorate the “anti-Semitism” that paranoid and vocal Jewish groups, who claim to speak for Jews as a group, say has burst forth as a result of the wider financial crisis.
One Jewish nonprofit allegedly harmed by the reported Madoff scam was the http://www.wvwnews.net/story.php?id=6240 Foundation, mentioned in an early article by the New York Times, which diplomatically said that the Boston area Foundation “works to reverse the dilution of Jewish identity through intermarriage and assimilation by sending teenagers to Israel and supporting other Jewish education efforts.” The Foundation, reportedly incapacitated by Madoff’s exposure overnight, might be resuscitated by “a quiet fundraising drive to restore losses,” according to New England Cable News, which also quoted the Jewish Federation of the North Shore: “We are all saddened by the effects this will have on Jewish family programming for our community, Jewish and interfaith alike … We have begun a conversation that we hope will lead to a thoughtful and intelligent plan for perpetuating at least some of the programs that have been essential to our community.” (As has been said elsewhere, what is “essential to the Jewish community” is often called “hate” when practiced by white Christians). That kind of mentality, as well as the affluence of Madoff’s investors, is not likely to endear people who share such views to the taxpaying public at large, especially if a bailout beyond the generous SIPC package is engineered.
Many members of the Palm Beach Country Club, openly referred to as a “Jewish” leisure enclave in the “mainstream” media, reportedly had their paper fortunes wiped out overnight. People felt as if they had hit the jackpot when Madoff, who owns a $21 million home, one of five he owns in the US and Europe a mile from the club, consented to take them as clients, despite the fact that his accounting often made little to no sense. Madoff had reportedly had questions raised about his investment ethics in the past, and the Securities and Exchange Commission is facing heat because of its lack of action since at least 1999, despite “numerous red flags,” according to the Wall Street Journal, which states that “SEC Chairman Christopher Cox ordered a review of the agency’s oversight of the [Madoff firm. The review will include whether relationships between SEC officials and Mr. Madoff or his family members had any impact on the agency’s oversight…Mr. Madoff’s niece, Shana Madoff, married a former SEC attorney named Eric Swanson last year. Mr. Swanson worked at the SEC for 10 years, including as a senior inspections and examination official, before leaving in 2006. Ms. Madoff is a compliance lawyer at the securities firm. Among Mr. Swanson’s duties was supervising the SEC’s inspection program in charge of trading oversight at stock exchanges and electronic-trading platforms…”
While it is fair to examine how much alleged nepotism may have played a role in the SEC’s lack of oversight of Madoff’s purported misdoings, some observers may suspect that the ground is now being prepared by Madoff’s alleged victims to lay blame for the fiasco at the door of the federal government, strengthening an argument for increased compensation either through lawsuits or some kind of mandated special bailout.
The incestuous nature of the whole Madoff event is underlined by news that a personage no less important than the Attorney General of the United States, Michael Mukasey has had to recuse himself from the Justice Department probe of Madoff. Marc Mukasey, the AG’s son, a white collar crime attorney, is said to be representing one of the figures in the case, a high-ranking Madoff employee named Frank DiPascali, who is uncharged. Mukasey, Senior’s anonymous henchmen quoted in the media “declined” to say whether or not the Attorney General himself knew Bernie Madoff, and some observers wonder if the AG also had “investments” with the accused conman.
On December 11, Bernie Madoff was arrested at his $5 million Manhattan apartment by federal agents. His two sons turned him in the day after he allegedly admitted to them that his whole investment scheme was a vast scam which, after at least a decade of smooth operation, appears to have begun to unravel in November, when a number of investors sought to cash out to the tune of $7 billion. According to the Times of London, Madoff made damaging admissions to agents when confronted, telling them that “‘There is no innocent explanation.’ The agents say that he told them ‘he paid investors with money that wasn’t there,’ that he was ‘broke’ and that he expected to go to jail.”
Charged with one count of federal securities fraud Madoff, who faces up to twenty years in prison and a $5 million fine, was freed on a $10 million bond, on the condition that he find four people as co-signers. On December 17, Madoff admitted to the court that he had not met the judge’s conditions, but instead of being taken into custody an arrangement was made granting an amendment to his bail package. Madoff is now under house arrest, must wear an ankle monitoring device, and his wife who, along with his brother, cosigned his bond, had to hand in her passport.
The passport finding came at the request of the prosecution, only weeks after a federal judge denied bail to Sholom Rubashkin in a the bank fraud case. Rubashkin, who is Jewish, is the former head of http://www.wvwnews.net/story.php?id=4624, Incorporated, the infamous Iowa kosher slaughterhouse accused of labor, ethical, environmental and immigration violations. “Under Israel’s Law of Return, any Jew and members of his family who have expressed their desire to settle in Israel will be granted citizenship,” the court said in response to prosecution concerns that, after he was found in possession of a large stash of cash and his children’s passports, Rubashkin would escape to Israel like others before him. Organized Jewish groups responded with outrage, while Rubashkin’s defense attorneys objected on legal grounds: “Jews are a protected class for Equal Protection purposes,” they stated.
America’s economic crisis sees an economic downturn that may rival the Great Depression in its eventual impact. Thanks to a toxic mix of http://www.wvwnews.net/story.php?id=5611.
Meanwhile, despite the banksters and speculators getting taxpayer handouts, America’s car companies are contending with serious resistance to a similar http://www.wvwnews.net/story.php?id=5683 from Capitol Hill, where many politicians are in the pocket of foreign corporations operating in the union-busting open shop South. Once pillars of America’s world-leading smokestack economy, whose unionized workforce helped to lift blue collar workers into the middle class, America’s own companies are nearing collapse as the credit crunch deepens and the cost of union labor prices them out of competition in the face of globalized, offshored, free trade economic facts.
But those who will suffer are merely working class people who lack the social or economic power to influence politicians. They’re just ordinary people, and as a result their employers face growing resistance on Capitol Hill to a parachute along the lines of that afforded the banks, investors and funds in the first 2008 bailout.
The Madoff case highlights the extreme corruption endemic in the US economic system, a house of cards that, eventually, government won’t be able to rebuild again.