“They had to know.  But the attitude was sort of, ‘If you’re doing something wrong, we don’t want to know.’ ”

-Bernie Madoff from Prison


The first interview for publication since being arrested in December 2008, Bernie Madoff speaks with the NYT. It is a bizarre and fascinating.

One would expect a longer interview with full Q&A to be forthcoming . . .


click for interactive timeline


From Prison, Madoff Says Banks ‘Had to Know’ of Fraud
NYT, February 15, 2011

Category: Legal

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

19 Responses to “Madoff: Banks “Had to Know” of My Fraud”

  1. jimc1004 says:

    The banks HAD to know, but nobody in his family knew anything even though they were all part of the business? If it talks like a weasel and walks like a weasel….

    What was Bernie’s advice to the guy who commited suicide? Something like “Man up”?

  2. Petey Wheatstraw says:

    “They had to know. But the attitude was sort of, ‘If you’re doing something wrong, we don’t want to know.’ ”

    This is how so many people ended up buying RRE they couldn’t afford (only, in the case of RRE, everybody was looking the other way while giving each other a reach-around — nobody saw anything).

    Shortly after the passage of SarbOx, I was in a meeting with the CEO of a company that had recently gone public. This fellow was complaining about the law. When I asked if compliance was all that costly or burdensome, he said that what really bothered him was the loss of plausible deniability.

    There you go.

  3. mathman says:

    Speaking of “plausible deniability”, here’s Jeffrey Sachs on the budget:


  4. jimc1004 says:

    Since you mentioned cars…

    Yesterday the deal was announced that the German stock exchange has made an offer to buy the New York stock exchange. TV coverage last night [PBS Nightly Business Report] was calling this deal, “A merger of equals”, and said that they did not yet have a name. My suggestion: “Daimler Chrysler”.

  5. jimc1004 says:

    ….’”the loss of plausible deniability”.

    Yes, exactly! Yet where are all the indictments?

  6. bluhorshu101 says:

    in the 1930′s we had one of the best people at securities fraud (Joe Kennedy) helping create the laws to govern banks & brokerage houses – Securities Act of 1933 & 1934…why isn’t this crook involved in helping identify the many loopholes that exist today? His life should be even more miserable unless he honestly tells all?

  7. budhak0n says:

    Sarbanes Oxley just made people who for years had been able to operate underground dump their assets into things you can see.

    What american enterprise and american “business”people need to do going forward is quite simple.

    Stop thinking you’re all that bright.

    Since the grand expansion of real economic enterprise from the Depression until the 70′s, most of the resulting booms and busts have been based simply on ways to build a better mousetrap.

    How’s about we accept the mice , and build some roads, bridges and schools instead? Sorry having a Jack Handee as visionary moment this morning.

    Now back to the tea party back biting and nonsensical expenditures on bus tours proclaiming the ethos of the dust bowl.

  8. Moss says:

    Per Chuck Prince:

    “But as long as the music is playing, you’ve got to get up and dance. We’re still dancing”.

  9. Lukey says:


    I assume that since your chart is referenced in this that you have read it. :


    I have to admit, as someone who considers myself a “capitalist” I found it unsettling to be in sympathy with so much of Quinn’s argument that the (big) banks and the Fed have conspired to screw the rest of us. It was an eye opener.

    I guess in light of this it should come as no surprise that the big banks turned a blind eye to the evidence that Madoff was running a Ponzi scheme. If they could profit off of it (and not get hurt when it collapsed) then why not go along?

    How do we fix this situation when both the Democrats and the Republicans support and defend these blood sucking freaks?

  10. ashpelham2 says:

    Anytime I heard someone whining about Sarbanes when it came out, I assumed they were a business owner who didn’t like that his annual accounting and audit expenditures was about to go up. To that person I would say, don’t blame congress, or the President, or even my accounting firm. Blame your counterparts in business, who for years, tried to manipulate asset prices and scam the customers who depended on them, and then lie about all of it the shareholders. Sarbanes Oxley is like a lock on a door: it’s only necessary if someone tries to do something wrong. If everyone does like they should, it doesn’t bother them at all.

    But, I was an accountant/auditor at that time, so it created additional jobs and income for my industry.

  11. MorticiaA says:

    Clearly, prison isn’t changing his smug attitude, nor is it teaching him the value of contrition.

    Now that I’ve gotten that off my chest, I actually believe that statement. I was working (in Houston) for a regional bank during the years that ran up to the Enron debacle. The bank wanted to catch big fish Ken Lay’s personal business so badly that it actually loaded up on Enron stock for its proprietary equity private bank product…. NOT because it was a screaming buy, but because they were desperate for Ken’s personal accounts.

  12. formerlawyer says:

    On the flip side of Sarbanes Oxley, one of my acquaintances is a foreign CFO of a large corporation and he told me how many of his colleagues were foregoing American capital markets because of that very legislation. The either remained private or used the TSX, LSE or some other foreign exchange for their capital requirements.

    While the plural of anecdote is not data, consider that the Fed had at least in 2007 considered the market share of U.S. exchanges, on various measures primarily new listings as being in decline.

    “However, it is the case that in recent years, most foreign equity issuers, except for some firms in Hong Kong and China, have withdrawn from the American exchanges. The diminishing presence of foreign IPOs in the U.S. market may be a response to the costs of implementing U.S. accounting standards, arguably greater legal obstacles faced by companies operating in the country, and higher equity underwriting fees. Some in the business community also contend that the more rigorous regulation introduced by Sarbanes-Oxley has raised the costs of listing in the United States. (Note, however, that at least with regard to the trends depicted in Chart 2, the evidence does not seem to support this view because the out-migration of U.K. and European issuers started in the mid-1990s, long before adoption of the Sarbanes-Oxley Act.)”


    It is possible to create a corporation of some significance without a public listing in the U.S:

  13. jjay says:

    Not only did the banks know about Bernie, the SEC knew all about it and did nothing.
    Bernies problem was not in being a fraud and a thief running a Ponzi scheme, no, his problem was his demise did not threaten any of the big players the way AIG’s bankruptcy did.
    Lone Wolf Bernie had no one to go to bat for him like AIG did.

  14. SivBum says:

    I don’t need Madoff to tell me the Ivy League trained quants should be aware of his ponzi scheme. 60 minutes had interviewed an auditor who send his few hours of ponzi analysis on Madoff but was ignored…

    Recall also recently, SEC questions Berkshire Hathaway’s inflated assets in its P&L. They make their own rules and rules are made to be broken:


  15. gordo365 says:

    More lies from a sociopath?

    Fascinating like an interview with Charles Manson. But not as freakish as Barbara Walter’s interview on 20/20 with the Melendez brothers. Or Larry King’s interview with Jon Mark Karr.

  16. Stuart says:

    None of them wanted to end the party. They ALL knowingly were getting drunk and didn’t care. They ‘strongly suspected’ that it was the taxpayer who was going to get stuck with the tab after-all. Privatize gains, socialize losses.

  17. MikeInSF says:

    … many of his colleagues were foregoing American capital markets because of that very legislation. The either remained private or used the TSX, LSE or some other foreign exchange for their capital requirements.

    Understood that SarbOx could use some tweaking. But in a pre-SarbOx land where companies closed their quarters on the 45th of December, I can’t see where any of the above is a bad thing.

  18. Transor Z says:

    From Matt Taibbi’s new article in Rolling Stone:

    Khuzami doesn’t come out all that well:

    When I ask a former federal prosecutor about the propriety of a sitting SEC director of enforcement talking out loud about helping corporate defendants “get answers” regarding the status of their criminal cases, he initially doesn’t believe it. Then I send him a transcript of the comment. “I am very, very surprised by Khuzami’s statement, which does seem to me to be contrary to past practice — and not a good thing,” the former prosecutor says.

    Earlier this month, when Sen. Chuck Grassley found out about Khuzami’s comments, he sent the SEC a letter noting that the agency’s own enforcement manual not only prohibits such “answer getting,” it even bars the SEC from giving defendants the Justice Department’s phone number. “Should counsel or the individual ask which criminal authorities they should contact,” the manual reads, “staff should decline to answer, unless authorized by the relevant criminal authorities.” Both the SEC and the Justice Department deny there is anything improper in their new policy of cooperation. “We collaborate with the SEC, but they do not consult with us when they resolve their cases,” Assistant Attorney General Lanny Breuer assured Congress in January. “They do that independently.”

    Around the same time that Breuer was testifying, however, a story broke that prior to the pathetically small settlement of $75 million that the SEC had arranged with Citigroup, Khuzami had ordered his staff to pursue lighter charges against the megabank’s executives. According to a letter that was sent to Sen. Grassley’s office, Khuzami had a “secret conversation, without telling the staff, with a prominent defense lawyer who is a good friend” of his and “who was counsel for the company.” The unsigned letter, which appears to have come from an SEC investigator on the case, prompted the inspector general to launch an investigation into the charge.