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Hill Takes First Whack at Madoff Scandal Today

Rep. Barney Frank's (D-Mass.) Financial Services committee takes of the bizarre case of Bernie Madoff and his $50 billion Ponzi scheme at a 2 p.m. hearing today.

Madoff, a long-trusted figure on Wall Street and former president of Nasdaq, confessed to his sons last month that his investment fund was a "lie" and nothing but a Ponzi scheme. He is under house arrest in his Manhattan apartment as the feds start to sort through his mess, trying to figure out who lost how much and whether he still has some dough stashed offshore.

Today, Frank and his fellow panel members will take square aim at the SEC and ask how they could have missed a swindle of such huge proportion. Today, the Wall Street Journal is reporting that the SEC probed Madoff's fund eight times over 16 years and didn't find enough to put him away.

The witness list includes a Madoff investor, and that should be interesting.

Scheduled to appear at today's hearing:

- H. David Kotz, the SEC's inspector general.

- Stephen P. Harbeck, president of the Securities Investor Protection Corporation Panel.

- Harry Markopolos, an independent financial fraud investigator, chartered financial analyst and certified fraud examiner.

- Allan Goldstein, a retired investor with Madoff.

- Tamar Frankel, a law professor at Boston University School of Law.

- Leon Metzger, adjunct faculty member, Columbia University, Cornell University, New York University and Yale University.

-- Frank Ahrens
The Ticker is Twittering!

By Frank Ahrens  |  January 5, 2009; 10:24 AM ET
Categories:  The Ticker  | Tags: Barney Frank, Bernie Madoff  
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Comments

FTA: "Rep. Barney Frank's (D-Mass.) Financial Services committee takes of [on?] the bizarre case of Bernie Madoff and his $50 billion Ponzi scheme at a 2 p.m. hearing today."

Barney Frank? The one who obviously has a less than firm grasp on proper financial conduct?

Posted by: spamsux1 | January 5, 2009 11:52 AM | Report abuse

You knew it had to happen > http://www.itsamadmadoffworld.com/

Posted by: tuzoner | January 5, 2009 12:08 PM | Report abuse

No one will be held responsible.
We (apparently) don't do that in America.
AT LEAST NOT FOR OUR POLITICAL ELITES.

Posted by: TOMHERE | January 5, 2009 12:48 PM | Report abuse

I am astounded over the vitriol concerning Barney Frank. Mr. Frank, along with every other politician in Washington, initially opposed tighter regulation of Fannie and Freddie. But what has he done for us recently? First, he was the ONLY politician who was willing to stand up to Paulson's gang and attempt to put some teeth into the bailout bill, and he is at the forefront of every attempt to bring some sanity to our economic and regulatory policies. Yet he continues to be vilified for his efforts to stand up for ordinary investors.

I think that the Bush administration did a masterful job of unloading the blame for their own regulatory failures onto Congressman Frank. Rove and Company have been able to tap into an ugly vein of anti-semitism, and have succeeded in turning the spotlight away from the real criminals -- the top executives at AIG, Citicorp, etc. who raked in millions in bonuses as they betrayed their fiduciary duties.

I'm afraid we have learned nothing from the past 30 years of Republican mismanagement. We are just as gullible and easily fooled as ever, and we will pay the price for our collective stupidity...

Posted by: jerkhoff | January 5, 2009 12:53 PM | Report abuse

Well, you can bet that the SEC people are NOT going to say that their jobs were simply audition positions for later employment on Wall Street. This gang, for years, has only and ever been about enriching themselves as quickly as possible. They had NO incentive to protect the nation's financial system. Therefore, they didn't. NO money for them? Well, why should THEY do anything for the country?

Posted by: cms1 | January 5, 2009 12:56 PM | Report abuse

This scan would have been played out at the corner of 11th & O Streets some years ago [Washington's formally premier outdoor drugstore]in under 1 hour.

Hay man -- any bam [BI-62 Preludin] out today?

You got it my man -- how many you be looken for?

How about 10 for $60?

Now you know that 10 for $60 is the brother's price man and you being a white dude, best I can do is 10 for $70, but I got to go over to da 'warehouse' at 6th & S Streets to get them for that price.

Dat be OK with you, man?

Yea fine, whatever.

OK GIVE ME DA MONEY AND I BE RIGHT BACK.

What do you mean -- give you da money -- where's da stuff?

LOOK HERE BABE -- I seen you out here before and you seen me here too. Now I want a reliable customer base, know what I mean -- I ain't going nowhere -- I'm here everyday, so what you be worried about?

WELL OK -- Here's the $60 bucks -- how long is it going to take you?

MAN JUST RELAX -- I'll be back in under 15 minutes -- in fact that's Shortie's bike over there next to da store. I'll grab it and should be back in 10 -- OK?
-----------------------------
25 minutes later
-----------------------------
Tyrone -- you know where Shortie is. A dude just tok his bike and my $60 to go to the warehouse for some bam.

Hey dude -- That was Shortie you just gave your money to and he won't be back today if he got your $60.

DON'T YOU KNOW BETTER BY NOW ???

YEA -- BUT HE SAID HE WANTED RELIABLE CUSTOMERS AND HE KNOWS I'M RELIABLE.

DUDE -- YOU JUST BEEN HAD -- Now don't hang around here cause as a white dude, you be bringing the jumpout squad down on us -- dig ???

AND YOU BE--EN WHITE DIDN'T MATTER MUCH -- YOU BEING STUPID DID. A FOOL AND HIS MONEY ARE SOON PARTED -- REMEMBER THAT !!!
---------------------------------------
SOME LESSONS ARE LEARNED IN AN HOUR,

OTHERS TAKE LONGER AND A REVIEW BY CONGRESS

Posted by: brucerealtor@gmail.com | January 5, 2009 1:08 PM | Report abuse

Barney Franks is trying to cover his tracks. He is the most corrupt POS in Gov. today and is responsible for the mess we find our self's in now. Nancy Pelosi, Harry Reid and Barry Franks are Jewish and are probably involved in this mess with Madoff. Who's better suited to handle the investigation then the ones responsible.

Posted by: askgees | January 5, 2009 1:09 PM | Report abuse

another set of show trial hearings to state the obvious:

1. since the Clinton Administration Wall Street has been off limits to over sight and minimal regulation. Both Democrats and Republicans signed off on the myth that the Masters of the Universe could create silk purses out of sows ears.

2. Wall Street ain't dumb. They expect a return on their investment; which segment of our national economy has been the biggest contributor to political campaigns? Which group of contributors expect their paid help to deliver?

3. While the SEC, FTC and Justice may be part of the Administrative Branch, they are also accountable to the Legislative. Or more accurately when the Legislative is doing its job of oversight and applying checks and balances to the Adminstrative. So which witness today is going to ask Barney and his committee the obvious: who here was asking any tough questions over the past dozen years?

Who is to blame. All those in power in Washington over the past two Administrations particularly those elected officials who believe their job is to pass legislation and who defer responsibiolity for that legislation and its enforcement to another branch of government.

Posted by: bobfbell | January 5, 2009 1:12 PM | Report abuse

Yes, by all means, let's investigate Madoff, that way, we don't have to investigate why the nearly the entire Congress and the Bush administration did nothing these past eight years except enable investment firms, banks, and AIG, among others, to swindle the taxpayers. And, of course, Bush's tax cuts for the wealthy, massive government overspending, and trillion-dollar unnecessary war in Iraq can all be swept under the taxpayers rug, too. I am beginning to think that Ralph Nader is right. We have a choice not between two political parties but between two gangs of con artists.

Posted by: Bob22003 | January 5, 2009 1:19 PM | Report abuse

Thank God the House of Representatives (HOR) is getting involved at last.

We can be sure things will turn out right once the HORs become involved.

Posted by: honisoit | January 5, 2009 1:21 PM | Report abuse

Barney Franks and Christopher Dodd are as responsible for America's loss of hundreds of billions of dollars as is Madoff. Both Franks and Dodd should be ejected from the House and the Senate, then new hearings should be conducted into the organizations and individuals who they influenced and protected.

The recession we are currently in, and the depression we may possibly be headed for, would not have happened without the active participation of Dodd and Franks and their able partners in crime Pelosi and Reid.

Posted by: mike85 | January 5, 2009 1:23 PM | Report abuse

How did they miss Madoff? Simple- with a dogma-driven Bush crony like Chris Cox heading the SEC, THEY HAD NO INTEREST IN LOOKING. The Bushies were determined to prove that government is the problem and voila, they proved it!

Posted by: hairguy01 | January 5, 2009 1:28 PM | Report abuse

The Grand Leader of "my" Investment Company says Wall Street mis-judged the amount of risk they were taking on. That's probably true. But it isn't the whole truth. Wall Street was subconsciously aware of the risk, highly leveraged risk, but the profits were so luscious, they couldn't stop taking our money. Something about buying fire insurance on your neighbor's house and never considering what would happen should the entire neighborhood went up in flames. We got rating agencies paid by the people they rate putting "good as gold" ratings on gobbage. We got insurance agencies promising to make you whole on the off chance some low income borrower defaults on his mortgage -- except the promise is made time and again with zero capital to back it up. And who is watching the store? The Securities and Exchange Commission? Not on your life. Those dudes use the SEC as a way station to highly lucrative jobs on Wall Street and a summer house in the Hamptons. The SEC boys play ball with Wall Street today and get rich tomorrow. Lies. Damned lies. And statistics. How do we the people get a government that does our bidding instead of the bidding of people who give fat campaign contributions? And Madoff? Jeez. It isn't like the SEC hadn't been explicitly warned that Madoff was running a scam. The SEC simply turned a blind eye.

Posted by: BlueTwo1 | January 5, 2009 1:44 PM | Report abuse

I'm fascinated that somehow Frank, Dodd et al. are assessed all of the blame for the "inability" of our regulators to uncover Madoff's transgressions. Did he not carry out this Ponzi scheme over a decade or more during which time Republicans held the chair of every financial oversight committee for 80% of that period? Was it not Bush who made it a priority to make the regulatory bodies as toothless as possible?

Posted by: zim66 | January 5, 2009 1:56 PM | Report abuse

Sorry askgees, hate to ruin your "Jewish conspiracy" theory, but Nancy Pelosi is a Catholic and Harry Reid is a Mormon. Perhaps Alan Greenspan and Ben Bernanke were Frank's co-conspirators...

Posted by: Joesnoplumber | January 5, 2009 2:11 PM | Report abuse

hahaha good luck finding the swindled money! It's all been transferred to isreal and is probably funding the current massacre of Palesinians (or war as Isreal is calling it as its military uses the latest machinery of warfare from the US, against people who are armed with sticks and stones!!)

Posted by: yard80197 | January 5, 2009 2:16 PM | Report abuse

""Who's better suited to handle the investigation then the ones responsible.""

hey askgees 1:09, isn't that how it usually happens in Amurica? When the Chicago PD was accused of brutality, the Chicago PD investigated the accusations and determined that there was no brutality. Same was done in LA and I am sure it happens in every other city. Put the fox in charge of the chickens. Then ask the fox, "Mr. Fox (I am not talking of Faux ) do you eat chickens?" And the sad thing is that we the people believe the Fox's response (which is naturally, "NO!!!"

Posted by: yard80197 | January 5, 2009 2:22 PM | Report abuse

All of those so-called regulators should be dismissed instantly. Why any any of them gets a paycheck is totally beyond belief. Bailing out the Wall Street BS boyz was a huge mistake, all of them should be hung by rope until dead. I can't wait until GWB, Cheney and the rest are outta there! And take your fruitless Iraqi war with you back to Texas by Trailways bus.

Posted by: isenberg888 | January 5, 2009 2:24 PM | Report abuse

Striking from the hearing was the "fall guy" role of some of the witnesses, and the empty, self-bolstering nature of comments from some of the panel members. As to the witnesses, Mr. Kotz predicated his testimony on the doubly-reiterated disclaimer that he did not commence his SEC role until December 2007 -- (merely) one (very brief) year ago. The balance of his testimony was so replete with claims of a lack of knowledge and passing the buck back to (unidentified) departments and (unnamed) individuals in his own organization that he all but left the impression that he spent, not his one-year but, instead, barely one-day in his role at the SEC.
Mr. Harbeck, on the other hand, delivered cogent, comprehensive testimony on the role of his organization in addressing the matter. To the extent the proceedings proved disappointing as to this witness, it came in the form of the misplaced, uninformed prodding of panel members whose questions demonstrated an inexcusable lack of awareness of the post-fraud, rather than the prophylactic, role of the SIPC. To the extent that a number of panel members posed informed questions of witnesses and statements made with targeted poignancy (ie. Rep. Kanjorski; Rep. Brad Sherman) the effectiveness of these presentations was countered by the self-bolstering posture of “outrage” shown by some co-members. Diverting the issues raised in this most sorrowful debacle to matters of “welfare mothers” or circuitous rantings of how "this is wrong,” and “we cannot allow this to happen again” (paraphrasing) served not at all to advance the public interest, and even less to demonstrate any degree of competence on the part of the respective speaking public servant.

In sum, the hearing was an informative first step in what will undoubtedly be a long, and, hopefully fully candid, road in the investigatory process. However, the early stage of the investigation notwithstanding, the public interest demands testimony, both from a panel that is far more prepared, and witnesses whose knowledge in fact stops with them, than was shown in yesterday’s hearing.

Posted by: NYCEsqView | January 6, 2009 11:35 AM | Report abuse

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