Stephen Reader covers politics for It's a Free Country, WNYC's interactive politics site. He joined the station in 2010 and has also worked for Studio 360, WNYC's Peabody Award-winning show about art, culture, and creativity.
Welcome to Politics Bites, where every afternoon at It's A Free Country, we bring you the unmissable quotes from the morning's political conversations on WNYC. Today on The Brian Lehrer Show, Steve Fishman, contributor to New York Magazine, talked about his exclusive interviews with imprisoned Bernard Madoff.
Almost two years into a jail sentence scheduled to last a century and a half, Bernie Madoff is giving phone interviews.
The reviled former stock broker, who plead guilty to 11 federal felonies regarding a $65 billion Ponzi scheme, recently spoke with Steve Fishman of New York Magazine, ostensibly to tell his side of the story. Simply put, that's a tough sell. His family won't speak to him, while his friends, his investors, and pretty much the rest of the American public hate him with a passion.
That's why the most startling quote to come out of Fishman's interview might be the one in which Madoff claims he didn't need to make money through fraud; rather, he says he "allowed himself to be talked into," essentially, fleecing people. By whom, Bernie? Said Fishman:
It is an elaborate kind of mental gymnastic. What he means is that at the point around 1992, when he had this advisory business going, suddenly on the scene come these large hedge funds and big banks, and they, by his lights, talk him into taking billions of dollars. He gets behind very quickly with that money, he puts it in treasury bonds yielding two percent and he returns to them 15 percent, just a flat out lie. He sees that as his moment of weakness, when he let himself get talked into taking that money.
Fishman explained that big banks and hedge funds, we know now, act as feeder institutions; they don't invest their capital so much as pay experts to do it for them. And that's where Madoff came in.
It's not everyday that an investment banker who grew up in the outer boroughs of New York City gets approached by massive financial institutions asking him to be in charge of billions of dollars. Irresponsible of the big banks, maybe, but that doesn't excuse Madoff in the least.
He wouldn't give them any info about volume, about his strategy. He said, "I told them if they didn't like it they could take their money elsewhere, and they didn't." He adds, "Look, I got 15, 18 percent returns consistently, and everybody knew I shouldn't have been getting them." His quote to me was, "If you don't think they knew, they did."
Statements like this could offer the opportunity for Madoff's victims to seek compensation from the financial giants themselves. The investors' trustee has already made public demands of Chase Bank and New York Mets owner Fred Wilpon, alleging that Ponzi scheme money flowed through their veins.
While it remains to be seen what new recourse wronged investors have, following this interview, Fishman said there was a chance that $20 billion in equity, or some portion of it, may be returned.
Ultimately, this kind of compensation may offer little comfort to the victims, some of whose lives have been irreversibly rocked by the fraud. Madoff says he understands their anger, and goes to great pains to make his sorrow and remorse known. We might not buy that this was something he just got "talked into," but Fishman said that in explaining and accounting for his actions, Madoff has taken the line that he is a good person who made a mistake.
He was not somebody who woke up one morning deciding to fleece everyone he knew and cared for. I frankly think that's true. He made hundreds of millions of dollars legitimately, which makes this whole Ponzi scheme that much more bizarre, because in some ways it's a vanity project. I do credit him with being hurt and registering the misdeeds and unhappiness he's caused his family. At the bottom of this, is Madoff a guy who can have real emotions, having done what he did to his friends and family? You know, that's something that we probably won't give him the benefit of the doubt on.
Fishman said that his interview with Madoff also shed light on what he called a "twin drama." Certainly, Madoff's punishment and the victims' compensation are at the front of most people's minds. But there is also the smaller, perhaps more heartbreaking story of the scandal's tragic (and fatal) impact on Madoff's family. Whether you feel sorry for him or not, his wife's estrangement and his son's suicide aren't matters that can be settled in court.
Certainly he called me to set the record straight. I think he's also extremely frustrated and unhappy that he can't speak particularly with his remaining son, Andrew. Though he didn't say this, it was clear to me that he felt that if he could make Andrew understand—a pie in the sky project, but nonetheless one he sticks to—if he could speak to Andrew, he might be able to heal this wound.