Whistleblower Harry Markopolos is on the stump promoting his new book titled “No One Would Listen.” It is about how it took 8 ½ years for the Securities and Exchange Commission to crack down on the Bernie Madoff scam. Markopolos says he sent letters to the SEC that were “too many to count” in an effort to expose the fraud. In an interview on “The Daily Show” this week, Markopolos said something about the SEC that really caught my attention. He said, “They still have all the same people there. They haven’t fired anybody, that’s the problem.” (The complete Daily Show segment is below)
The SEC missed the single biggest fraud in history (estimated at $65 billion) and not a single regulator lost their job over this screw-up? What is this regulatory body for but to protect investors? Is the SEC really just a public relations ploy to make people think Wall Street is being regulated? That’s the way it looks to me when I hear there is no house cleaning going on. There is no effort to change the tone and direction of the agency. It is just business as usual, and that’s the way Wall Street likes it.
Speaking of the Madoff scam, angry investors are suing the Securities Investment Protection Corporation (an industry insurance fund) to get some of their money back. May I simplify the real problem for you here? I called SIPC yesterday and asked how much is in the insurance fund to pay jilted investors? I was told it was “$1.159 billion at the end of February.” How long do you think that is going to last when considering Madoff’s crime was $65 billion? How many other scams will this be able to pay off? There is simply not a lot of money in their fund considering the trillions of dollars in investments it is insuring. Is SIPC real insurance for a large calamity or just PR to make you “feel” safe?
What about the rest of Wall Street? Certainly there have been new laws and big changes made to protect against another meltdown? After all, it was Wall Street’s reckless investments that caused the financial crisis. Eighteen months after the mess started, there is not a single new law or regulation for the financial industry! According to a new Harris Poll released this week, 82% of Americans want the government to clamp down on the financial industry. There is legislation currently in Congress for new regulation and consumer protection, but there is no telling when or if anything will be passed.
