Madoff Pleads Guilty, Bail Revoked – News Roundup

• Madoff’s Bail Revoked – New York Times

Bernard L. Madoff pleaded guilty Thursday to all the charges against him and expressed remorse for a vast Ponzi scheme that bilked investors out of billions of dollars.

Standing before Judge Denny Chin in United States District Court in Manhattan, Mr. Madoff was sworn in and reminded that he was under oath. Noting that he had waived indictment, Judge Chin asked, “How do you now plead,” guilty or not guilty?

“Guilty,” Mr. Madoff responded.

His formal confession will cost him his liberty. Rather than letting him remain free on bail and return to his apartment on Manhattan’s Upper East Side, Judge Chin ordered Mr. Madoff immediately jailed as he awaits sentencing.

“He has incentive to flee, he has the means to flee, and thus he presents the risk of flight,” Judge Chin said. “Bail is revoked.”

The 11 counts of fraud, money laundering, perjury and theft to which he pleaded guilty carry maximum terms totaling 150 years.

• Madoff tells judge he’s guilty in Ponzi scheme – Bloomberg
• Madoff remanded to jail – New York Daily News
• Madoff plea troubles investors – Reuters

Some Clear Thinking on the Financial Mess from Norris and Krugman

I read both of these columns in last Friday’s edition of the New York Times.  It’s the end of a historic year for the U.S. economy.  We may look back in a few years and say that 2008 was the beginning of the end for supply-side economics (trickle down) and a nearly wholly unregulated financial services system.  2008 will hopefully become known as the time when ordinary people got concerned enough about the price they were paying for the excesses of banks which traded stocks, brokerages which sold insurance and insurance companies which did both.  2008 was a year when ordinary folks began to understand mortgage backed securities and credit default swaps – and what the failure of those derivatives meant for their local widget makers’ line of credit.

If you don’t read anything else today, read these two columns:

• Op-Ed, Floyd Norris: A year of financial contradictions and chaos - New York Times
• Op-Ed, Paul Krugman: The Madoff Economy – The New York Times

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SEC Missing In Action on Financial Crisis Had Knowledge of Madoff Wrongdoing 9 Years Ago

Already under fire since then-presidential candidate John McCain called for his ouster as Securities and Exchange Commission chairman, Chris Cox had to admit Monday night that the SEC dropped the ball miserably and repeatedly over the course of nine years regarding Bernard Madoff’s $50 billion bilking of investors.

In a statement released by the SEC, Cox said in part:

Since Commissioners were first informed of the Madoff investigation last week, the Commission has met multiple times on an emergency basis to seek answers to the question of how Mr. Madoff’s vast scheme remained undetected by regulators and law enforcement for so long. Our initial findings have been deeply troubling. The Commission has learned that credible and specific allegations regarding Mr. Madoff’s financial wrongdoing, going back to at least 1999, were repeatedly brought to the attention of SEC staff, but were never recommended to the Commission for action. I am gravely concerned by the apparent multiple failures over at least a decade to thoroughly investigate these allegations or at any point to seek formal authority to pursue them. Moreover, a consequence of the failure to seek a formal order of investigation from the Commission is that subpoena power was not used to obtain information, but rather the staff relied upon information voluntarily produced by Mr. Madoff and his firm.blockquote>
Cox’s SEC bio says, “During his tenure at the SEC, Chairman Cox has made vigorous enforcement of the securities laws the agency’s top priority …”  Well, in the case of Madoff, vigorous began when Madoff was exposed by his son.  The SEC’s statement on Monday night practically trips over itself proclaiming the agency “… took emergency action …” dedicated “every necessary resource …” met “multiple times on an emergency basis” and will be conducting a “full and immediate review.”  Sounds like a veritable orgy of enforcement activity over at the ol’ SEC.

Whew!  All of this just since last Friday.  Did I mention that the SEC was made aware of Madoff’s sketchy dealings beginning nine years ago?  I believe Mr. Madoff would still be working the Ponzi scheme today had his own son not turned him in to authorities.

After they take the flak who wrote Cox’s statement out back and shoot them, someone needs to fire Chris Cox and the rest of the commissioners.