This insider description of life inside the Madoff operation is a fascinating read, but this stuck out:
Did he think something was fishy? “It never dawned on me that Bernie was running a criminal operation down on the 17th floor. I thought he was just a quirky guy. Now, in hindsight there are a lot of things that point to illegal activities. The emails, for instance, were clearly handled that way so that nobody could access them. They didn’t want any record if someone got suspicious and wrote so to a colleague, for instance, or you pressed the search bar and the word Ponzi came up.”
The salaries, said the employee, also in hindsight, were so large because Madoff wanted to keep people happy; he wanted allies in case they found out what was really happening. “Nobody left because they could never get another job that paid as well as this one. Some people, after his arrest, speculated that it was kind of like hush money; nobody asked any questions because the Madoffs were nice, protective, generous.
“The Madoffs had all of us out to Montauk for yearly weekends. We didn’t go to their houses but they put us up in hotels. They had a barbecue lunch on the sand and a formal dinner under a tent at the yacht club. On Sunday they took a small subset of employees on a fishing trip.
I can’t be the only one who immediately thought of this.
Punchy
w/r/t salaries: I cannot be the only one absolutely stunned at the salaries and bonuses of these Wall St. banker-types. Maybe it’s my Midwest midset, but to see what these people made, what they felt they were entitled to, and what they percieve as fair compensation for little more than pushing papers and not asking any questions is and has been mind-blowing.
I knew they made 6 figs — I did not know they made 7 and 8 fig bonuses annually to sign their name and push computer buttons.
Mike
When I read that, I thought of this.
Jackmormon
Whereas when I read that, I thought of this.
p.a.
The picture of the tire swing on JMM’s site made me think of South Africa’s tire ‘necklace’ for Madoff, AIG et. al.
And yes, this is hyperbole, I’m not advocating lynchings.
Just Some Fuckhead
@Punchy:
And now that those highly paid financial wizards have blown up our worldwide system of finance, we’re being told that the people they need to retain to unwind it all deserve huge bonuses for their important work. They get it coming and going.
schrodinger's cat
What I am wondering is how many more Madoffs and Stanfords will come to light as the economy continues its tumble.
uh_clem
It’s simply risk vs reward. Take big risks, reap big rewards. It’s the American way.
–
The thing is, the smart people have figured out how to structure things so that they get the reward while somebody else takes all the risk. Everybody involved in the credit default swaps and liar loans know that they themselves would never be held accountable if things went bad. And they weren’t.
The Other Steve
I was thinking I’m in the wrong world.
Where the hell can I make $250,000? I’m not even making half that and I thought I was overpaid.
The Other Steve
I am going to write a book on Steve’s Political Theory of Economics, cause I called this 6 years ago and it played out just like I said. Granted, it was based on my observations of Bush and Enron and such.
When shit started tanking in Sep/Oct I said that it’s really bad, because my PTOE states the bad news comes out after the election because they don’t want to be accused of throwing the election. Then in November the Madoff stuff broke, followed a few months later by Stanford. Just as I predicted. I said there would be a bunch of bad news, and then about April the garbage would have all been taken out and things will start improving. And remember Tom Petters was arrested in October for running a $5 billion ponzi scheme here in Minnesota.
So I’m hoping, and I believe we’ve hit the top of the heap. There aren’t any more of these to come out. At least no big ones.
And it’s just about april, so things can start to improve now.
Or at least that’s what I hope. I’m crossing my fingers.
Zandar
I still think of Weekend at Bernie’s when I hear this.
Hopefully they get that fellow from LA Law to play him in the movie. Put Chris Tucker in it too, have it so his character is really the one behind the $62 billion scheme, and Vince Vaughan as the earnest SEC guy trying to catch him.
Toss in Sacha Baron Cohen as Dave from Accounting.
Comedy gold, right there.
NonyNony
You saw the bit in Newsweek about how AIG’s "legit" business might actually be riddled with fraud and not worth a plugged nickel, right?
I hope you’re right, but I’m betting April is optimistic. I’m betting that crap will be coming out until November at least. I think a lot of the money we’re giving to the banks right now is keeping them afloat long enough to hide a lot of fraud in the short term, and when the piper finally comes due (and it will – I really do think receivership for the big banks is inevitable), we’re going to find out about a lot more stuff. The longer it takes to get to that point, the worse it’s going to be.
BDeevDad
Matt Taibbi has an awesome, yet scary, article on the whole banking mess and AIG’s role in it. He is consistently one of the best journalists around these days.
zirconium
Sounds like Bernie was as personally sweet to his employees as he was to his victims. Taking the staff out to play on the sand at Montauk, how nice (but please don’t go near the house). Why didn’t he take them to the Catskills?
Having once worked for the super rich, Bernie’s "benevolence" and "generosity" is a behavior I’m completely familiar with. They smile and have pleasant things to say, but under their breath they’re whispering "You mean nothing to me" even when they’ve known you for years.
Corner Stone
@Zandar
Holy shit! Somebody get this person an agent! You, sir/madam, have defined the pure essence of comedy gold right there!
I’m not sure anyone could resist that combo.
Corner Stone
@zirconium
They’re actually not whispering anything under their breath. That would take energy or at least an acknowldgement that you exist. In fact, their eyes are glazed over and they don’t actually see you at all as a real person but merely an object in their viewing path they don’t want to trip over.
J. Michael Neal
It’s more complicated than this. A good trader is worth that much to a company.* I was a mediocre trader, and my worth to the company was in the mid-five digits, tops. There were at least three people in that room who were worth eight figures. Keep in mind just how much money a someone can make in trades, and, conversely, how much he (almost always a he) can lose.
There was one day we had a computer glitch, and the guy who trades the NASDAQ index lost $7 million in about half a second. That wasn’t the trader’s fault; it was a software problem, but it shows what can happen in things go wrong.
One of the things we need to do is fix the system so that trading electronic packets isn’t the way to make huge money, but as long as it is, there are going to be people who command these salaries.
*One observation I would make about this mess is that I don’t think all the traders were grossly incompetent. Management, yes. The quants and others who put together and approved the models, yes. The traders, not so much. If they didn’t fall into the first two categories, they may have been extremely competent at the job they were given: selling CDS at the best price possible. The problem is that they were given the wrong job, not that they executed it wrong.
Rome Again
Interesting that you thought of McCain, I thought of Goering’s lavish party weekends followed by hunting expeditions for a certain few of the guests. Although, according to Herman Wouk’s version of such, the Goering’s were at least kind enough to allow their guests into their compound.
Rome Again
That’s cold. Reminds me of my family.
Nancy Irving
Madoff was considered a "guru" in the securities trade.
One weakness of ambitious people and elites–people who seek and obtain prestige–in every field is that they worship gurus.
Madoff was instrumental in the creation of NASDAQ, and had been a chairman of the NASD. Everyone considered him to be an elder statesman and guru of the securities industry. Which means that no one ever looked at him critically, never mind skeptically. Including regulators.