Investigators: Brace For More Madoff Scandals

Politico :

Barack Obama's economic team, already reeling from the financial meltdown, certainly doesn't need any more headaches. But investigators and Washington officials say that they're almost certainly going to face one unexpected problem in 2009: More Bernard Madoff-style corruption scandals.

The ranking member on the House Financial Services Committee, Rep. Spencer Bachus (R-Ala.), says he's confident there's more bad news on the way.

Read the whole story: Politico

Comments

[VivaZapata]

just when it looked like only the working class was getting screwed, along came robbing hood and his merry men of wall street and suddenly rich people were getting it put to them as well. The difference? Most of them still have more than enough resources to fall back on or at least bounce back from. After all, all we keep hearing is how they intended to give the money entrusted to Madoff to charity.

[karinova]

I apologize for cross-posting this, but I really want to know.
I have a question about Ponzi schemes in general.

A Ponzi scheme can NEVER EVER work, because the more successful you are, the closer the scheme is to collapsing. If you succeeded in getting every single human on Earth to buy in, you'd be doomed, because you wouldn't have any more bottom-tier investors. So I've always wondered, why would anyone ever try it? Now, clearly it's very easy for an investor to get sucked into a Ponzi scheme without realizing it, hence all the post-Madoff news items about "How to Avoid Becoming a Victim of a Ponzi Scheme."

But here's my question:
Is it possible that the PERPETRATOR of a Ponzi scheme might not understand that that's what he's doing? Might he actually start out running a legitimate investment, only to have things (I'm not sure what things) spiral out of control, until next thing he knows, he's running a pyramid scheme? (I'm sure gambling mentality and denial would be a part of it.)

Are there things an investment manager should know, in order to "Avoid Becoming a Perpetrator of a Ponzi Scheme"?

[VivaZapata]

ever hear of the phrase, "... absconded with the money"?

[PhilipTaylor]

Most really smart people know it has an END Game and so they clear out early, like Pau lson did when he took the Treasury Job and got a tax exclusion that saved him approximately $100 Million in taxes.

So the ones that start a Scheme like this think they will exit early and avoid punishment, but Gre_ed still traps a bunch of them because they just can not bring themselves to leave as long as the money keeps flowing!

Also as long as Fe_ar is less than Gre_ed they feel safe!

[truthyguy]

Madoof could not have done it without the aid of others who are as yet unnamed. And there are without any doubt those who saw what Madoff was doing and copied it.

[PhilipTaylor]

The BIGGEST PONZI Scheme in HISTORY: Wall Street Generated Housing Crisis in Derivatives!

This was stage 1 in Bush plan and involved much larger FEES than "Safe" mortgages:
_______________
2002 Video of Bush encouraging Banks and Brokers to offer minorities none qualifying home loans and requiring Fannie/Freddie to buy sub-prime mortgages:

http://www.youtube.com/watch?v=kNqQx7sjoS8&feature=related

This one is english with German sub-titles and a different twist:

http://www.youtube.com/watch?v=GkAtUq0OJ68&feature=related
__________________

Stage 2 Investment Banks "Slice and Dice" these high risk mortgages into Derivatives!
Banks add Massive Fees to Derivative Paper eating up 15 to 30 years of Appreciation!

Stage 3 Bribe Ratings Agencies to rate HIGH RISK Derivatives as "AAA" paper like T-BILLS

Stage 4 Easy to sell "AAA" paper all over world to innocent victims. Sold paper on a $200,000 at a cost to victim of $400,000 due to imbedded FEES.

It worked like any PONZI Scheme but failed like any PONZI Scheme when the housing stopped appreciating and the Victims refused to buy.

[partyofone]

The whole subprime, Wall Street meltdown, federal bailout is a Madoff style ponzi scheme perpetrated over the last decade by Clinton, Bush, Rubin, Palsun and the Goldman Sacs/Treasury Dept revolving door. The orchestrated the deregulation of the financial services industry, created the Clinton bubble as to attrack investors, took their billions, and hand the collapse to the small investors and taxpayers.

What really is the difference in that and Madoff, except its trillions, not billions and no one will be charged.

[ObjectiveRealist]

quote:
The question then, is how to find the questionable firms?
/quote

Easy, you glance at public records of whoever contributed financially to Bush and other "de-regulators" and the glaring inconsistencies will stick out like sore thumbs. This will be easy, but described as difficult, by overpaid lawyers, CPAs etc.

[me again]

Katie, bar the door!!!!!

[themodernleader]

In turning money and banking to its fundamental function of lending, The Obama Administration must bring about powerful new rules and regulations. Such reatrictions must guarnatee that finance cannot ever again sabotage American business and manufactruring for the fast buck, nor make loans that permit highly leveraged and unjustified borrowing and lending.
If Obama does not deal with the unwound financial powers head on, he will forever regret that temerity as this country becomes a captive political, economic and financial organization.

[partyofone]

do you really think that will happend with Geiger in the Treasury and Rubin advising Bush. Get real. It's just a changing of the foxes guarding the treasury hen house.

[aprilinheaven]

The story/crime that has yet to be told....MORTGAGE SERVICING FRAUD! And I'm so tired of trying to break it myself, I just want to cry honestly. I'm here, saying the term, one more time hoping someone will look deeper into this and I'll wake up one day to the headline "Mortgage Servicers Stealing From Home Owners!" or "The Real Culprit Behind the Meltdown!" or "Mortgage Servicing Fraud: The Crime to Make Enron Look Like a Parking Ticket!"

Every Madoff headline, I hope, leads us a step closer to being validated.

[ObjectiveRealist]

I don't want to upset you, but isn't that the story that broke last year, or even earlier? I don't recall hearing it called precisely "Mortgage Servicing" but it looks like that same story, that is sort of assumed known now, as a major contributing factor to the Bush Recession.

Please excuse my ignorance, if it is a separate thing.

[aprilinheaven]

Actually, yes it is a seperate thing. Everyone knows about mortgage fraud, like brokers lying on applications and such, but this is different. MS Fraud is the servicers of the loans fabriacting lates/defaults, piling fees on so high the borrower can not pay, force placed insurance on mortgages that already have insurance, etc, etc. It is essentially stealing from the borrowers payments through bogus fees and charges.

[zizyphus]

Hedge funds exist to launder the trillions in black market money from illegal drug sales. We can stop this merry-go-round by making hedge funds illegal, and decriminalizing drugs. All the banks are now gangster run, as a result of the phony War on Drugs,which imprisons the poor while enriching the wealthiest people on earth. The government is running the drugs, they want all the profits, and use the small time dealers as prison fodder.

[tomas0808]

Yep. But hey, with everything privatised that shouldn't be, it's more profitable to jail millions of non violent drug offenders than let them work low paying jobs. It's the market. With all their Wall Street scams, hedge funds, credit card usury they still couldn't get enough so they created a new market to turn a profit out of people who usually don't buy enough of the other junk they're selling.

This is why I live off the grid. This country has devolved into a crap hole the last forty years. And I will stay off the grid until healthcare, education and prisons have the profit motive removed from them. I don't think I'll be seeing it in my lifetime

[raker]

My blood boils every time the media call a crime a "scandal." It's lazy, silly, Access Hollywoodization of the news. Call stories about Madonna's hoohoo scandals, but a $50 billion swindle is a crime. Leave the trivialization of the news to Brian Williams and Charles Gibson.

[OhgReaTone]

These people should be charged with treason for the damage done to our country. ......................

http://thefiresidepost.com/2009/01/08/bernie-madoff-traitor-turncoat-judas-treason/

[totaldisbelief]

The new administration is going to need an army of forensic accountants to unweave the webs.

[partyofone]

Savings and Loan collapse, junk bonds, Enron, subprime mortgages .... two or three scapegoats will go to jail, and the cirminal profiteeting financial industry will invent its next ponzi scheme to swindle small investors and taxpayers.

[TJCole]

Bush and his ilk gutted every and any agency who' purpose was to protect investors or consumers from corporate criminals such as Madoff..!

Bush is still signing "Unitary" decrees, advantaging corporate interests over public safety and our environment...!

Every government agency must be rebuilt from the bottom up they are that eviscerated and filled with incompetent and unqualified zealot sycophant Bushies...!

[partyofone]

Bush certainly did his share, but we need to acknowledge that it was Bill Clinton and Robert Rubin he de-regulated the financial industry 10 years ago, openning the door to the current crisis. Clinton and Rubin are both now mega millionaires.

[jadecat]

It's time to wake up and do away with Hedge funds:

http://globalinvestmentwatch.com/2008/12/17/its-time-to-outlaw-hedge-funds-once-and-for-all/